As you probably remember, the original text of the Draft Law on Amendments to the Personal Income Tax Law led to a kind of struggle in the IT community in Serbia.
The draft Law underwent several changes after the broader members of the IT community expressed their objections in public hearings, which required it to be included in public discussion. According to the statement of the Government of the Republic of Serbia, all objections and suggestions to the Draft contributed to the amendments of the legal solution to cater to market needs.
As expected, the adopted Draft has delayed the implementation of the Independent Contractor Test until March 1, 2020, therefore, allowing the IT sector two months “grace period” to adapt to those major changes. On the other hand, this did not apply to incentive measures that were applicable from the beginning of the following year.
Also, worthwhile changes have been introduced to the criteria under the Independent Contractor Test. About the first version of the criteria, we have written in our news New Lump-Sum Taxation of Entrepreneurs and Impact on the IT Sector.
If the proposed criteria determine that the individual is actually an employee, the company will be able to enter into a working relationship with that individual by concluding an employment contract and thus take advantage of the announced tax incentives.
The Ministry of Finance has adjusted five of the nine criteria in line with the given remarks to eliminate the possibility of extensive interpretation that could lead to bypassing the legal provisions.
We provided a summary of the final criteria below: