Guide
Independence test (test samostalnosti)
Biro Vision analyzes your business relationship with clients against the nine statutory criteria and helps you organize your work so you stay tax-independent.
The independence test scares many freelancers and entrepreneurs, but there is more panic around it than is warranted. It does not forbid you from working for one client, nor does it automatically mean higher tax. It is nine criteria assessed for each client separately, and only if five or more are met for one client is the income from them taxed more heavily. Below we explain clearly when there is a real risk, who pays the extra tax (and why it is different with foreign clients), and how to align your contract and way of working so you can sleep soundly.
What you should know
- The test is nine criteria assessed for each client (principal) separately. You fail for one client only if five or more of the nine are met.
- The criteria look at who sets working hours and leave, who provides the premises and equipment, who arranges training and supervision, whether you are integrated into the client's operations, whether the fee is set in advance, and who bears the business risk.
- A high income share from one client (70% or more over 12 months) and a long engagement (130 or more working days) are just two of the nine criteria, so on their own they do not fail the test until five in total are met.
- If you fail, the income from that client is taxed as other income: 20% on the gross (no standardized cost deduction), plus 24% PIO and, if you are not insured on another basis, 10.3% for health. The rest of your business stays on flat-rate.
- Who pays depends on the client. A domestic company calculates and pays the tax by deduction, while with a foreign client there is nobody to withhold, so you calculate and pay yourself, usually through a quarterly self-assessment return.
- The test applies to income from 1 January 2020 and is not applied to earlier years. On audit the Tax Administration can assess back taxes, with interest and fines, so it is wiser to align your contract and actual way of working in time.
| Item | Value |
|---|---|
| Total number of criteria | 9 criteria |
| Threshold for dependent status | at least 5 of 9 met for one client |
| Share of income from one client | 70% or more over 12 months (one of the 9) |
| Engagement with the client | 130 or more working days over 12 months (one of the 9) |
| Taxation if the test is failed | 20% on the gross with no standardized cost deduction, plus 24% PIO (and 10.3% health if not otherwise insured) |
| Who calculates the tax | Domestic client by deduction; with a foreign client, you yourself |
| Applies to | Income from 1 January 2020, not retroactively |
How we handle it
- 01 We analyze your clients We review the structure of your income and identify clients where there is a risk of dependent status, including domestic and foreign clients.
- 02 We assess the nine criteria For each high-risk client we go through all nine criteria and determine how many are met and how close you are to the threshold of five.
- 03 We propose adjustments to the cooperation We point out the specific points in the contract and the way of working that increase risk and suggest changes that bring the relationship back within the bounds of independence.
- 04 We align contracts and invoicing We help ensure that contracts, the fee, and invoicing through SEF and eFaktura reflect genuine independence, especially for work with foreign principals.
- 05 We calculate the tax consequences If dependent status is unavoidable, we calculate the other-income tax and contributions and clearly show you the net effect on your business.
- 06 We track the thresholds during the year Throughout the year we monitor the share of income per client and the number of working days of engagement, so you can react in time before crossing the critical limits.
Frequently asked questions
Does failing the independence test mean I have to close my flat-rate business?
No. Failing does not close your business or remove your flat-rate status. Only the income from that one client is reclassified and taxed more heavily, and you can usually fix that single relationship by adjusting how you work and what your contract says.
Most of my income comes from one client. Do I automatically fail?
No. Earning 70% or more from one client is only one of the nine criteria. You fail only if at least five of the nine are met for that client, so a high income share alone is not enough.
I work only for a foreign client. Does the test apply, and who pays the extra tax?
Yes, it applies the same way. The difference is that a foreign client does not withhold Serbian tax, so if you fail the test you must calculate and pay the tax and contributions yourself, usually through a quarterly self-assessment.
How much more will I pay if I fail the test?
That client's income is taxed as other income at 20% on the gross, with no standardized cost deduction, plus a 24% PIO contribution (and 10.3% for health if you are not otherwise insured). That is far more than the fixed flat-rate amount.
Can the Tax Administration charge me for past years if they find I was dependent?
Yes. On audit they can assess back taxes and contributions for prior periods, add default interest for late payment, and issue misdemeanor fines, so it is safer to align your contract and actual practice now.
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