Cash Payments in Construction: What Ban Is Proposed in Bulgaria?

Status as at 13 November 2026: the bill has been approved by the Council of Ministers but is not law in force. The final text and commencement date depend on the parliamentary process and publication.

What could change for construction entrepreneurs, investors, contractors, subcontractors and suppliers if a full cash-payment ban is adopted for the sector.

Author: Ivanova Legal Solutions  |  Category: Construction, commercial and tax law

The construction and real-estate sectors are facing a new legislative initiative focused on financial flows and payments at construction sites. At its meeting of 11 November 2026, the Council of Ministers approved a draft bill proposing a complete prohibition on cash payments between participants in the construction-investment process.

The initiative would require all payments between construction companies, main contractors, subcontractors and suppliers of materials and equipment to be made solely by bank transfer or through other electronic and traceable payment instruments, regardless of the amount.

“The proposed changes aim to bring full transparency to the construction supply and subcontracting chain. If the law is finally adopted, construction entrepreneurs, investors and building-materials traders will need to review their contracts and operational-payment arrangements without delay.”

1. What does the new government bill propose?

According to the official government announcement of 11 November 2026, the approved bill introduces a special, stricter regime for the construction sector, departing from the general cash-payment thresholds in Bulgaria:

• Complete ban on cash payments: cash payments would be prohibited for construction and assembly works, design, copyright and technical supervision, rental of construction machinery, transport services and the supply of construction materials.
• Banking or electronic traceability: all payments would need to be made by transfer to a payment account or through licensed electronic payment instruments that ensure an audit trail and identification of payer and payee.

2. Personal and material scope of the proposed measure

The proposed provisions cover the whole business chain in construction (B2B relationships):

• Investors and employers: when paying main contractors and designers.
• Main contractors: when paying specialist subcontractors for structural works, electrical works, plumbing, HVAC, finishing works and façade systems.
• Suppliers of construction materials and raw materials: traders in concrete, reinforcing steel, bricks, insulation and dry mixes.
• Suppliers of ancillary services: rental of cranes, excavators and scaffolding, as well as transport logistics.

Important clarification: The measure targets commercial and business relationships between undertakings in the sector. It does not displace the general rules applicable to end-consumer natural persons buying completed properties, for whom the general requirements of Bulgaria’s Cash Payment Restriction Act and the Notaries and Notarial Practice Act remain relevant.

3. What is the current regime under the Cash Payment Restriction Act?

To understand the proposed change, it is useful to recall the rules that currently apply under the Cash Payment Restriction Act:

• General threshold of BGN 10,000 (approximately EUR 5,112.92): under Article 3(1), item 1, payments in Bulgaria equal to or exceeding BGN 10,000 must be made only by transfer to, or payment into, a payment account.
• Linked payment transactions: even an individual payment below BGN 10,000 must be made by bank transfer if it forms part of a contract or transaction on the same basis whose total value reaches or exceeds BGN 10,000. Instalments under a construction contract above the threshold therefore cannot currently be paid in cash.
• Employment remuneration: employers with 100 or more employees must pay salaries only to an account.
• Dividends: dividend payments of BGN 1,000 (EUR 511.29) or more must be made only by bank transfer.

The difference: Under the current regime, individual small supplies of materials or services below BGN 10,000 outside a framework contract could be paid in cash with a fiscal receipt. The new proposal would remove any threshold for the construction sector and require fully cashless payment flows.

4. Rationale and objectives of the legislative initiative

The executive’s main reasons for the complete ban are linked to:

• Combating the shadow economy and tax evasion: limiting practices of underreporting actual volumes of works and avoiding VAT and corporate tax.
• Control of employment relationships: reducing unregulated payments to construction-site workers without employment contracts and social-security contributions.
• Full documentary traceability: facilitating audits and cross-checks by the National Revenue Agency concerning the origin of building materials and the identity of actual subcontractors.

5. Sanctions and administrative liability

Compliance is monitored by the National Revenue Agency. Under Article 5 of the currently applicable Cash Payment Restriction Act, sanctions for breaching the payment regime are significant:

• Legal entities and sole traders: a pecuniary sanction of 50% of the total payment, and 100% upon a repeated infringement.
• Natural persons: a fine of 25% of the payment, and 50% upon a repeated infringement.

As construction transactions frequently involve substantial amounts, a penalty of 50% or 100% of a transaction can create serious financial exposure for a company.

6. Legislative status: when would the new rules apply?

As at 13 November 2026, the bill has been approved by the Council of Ministers but is not yet law in force.

Before it can produce legal effects, it must pass through:

1. introduction and consideration by the National Assembly;
2. discussion in the relevant parliamentary committees;
3. first and second readings, during which both the text and commencement date may change; and
4. a presidential decree and publication in the State Gazette.

Until final publication and entry into force, construction businesses should comply with the current BGN 10,000 threshold and the rules on linked transactions.

7. Practical recommendations for construction companies and investors

In light of the expected legislative process, construction entrepreneurs, contractors and suppliers should consider the following steps:

• Review template subcontracting and supply agreements: add express clauses that all interim, final and advance payments are made only to the contractor’s or supplier’s bank account.
• Stop cash advances at construction sites: avoid providing cash to technical managers or foremen for urgent material purchases without a bank transfer.
• Introduce company bank cards and electronic payment methods: equip responsible staff with company debit cards linked to the company account for small operational expenses.
• Monitor the legislative process: follow the final text for potential exemptions, transitional periods or specific requirements relating to electronic invoices and acceptance protocols for construction works (Act 19).

Need support?

Ivanova Legal Solutions assists construction entrepreneurs, designers, investors and real-estate traders with drafting and reviewing construction, supply and subcontracting agreements, and with aligning operational processes with financial requirements.

Send an enquiry.

This material is for general information and does not constitute individual legal advice. Official source: Council of Ministers, 11 November 2026.