Freelance vs EOR in Serbia: What Changes When Your Contractor Becomes an Employee

Serbia's independence test, IP ownership and the real cost of moving freelancers to Employer of Record (EOR) employment, explained by Ambacia Consulting in Belgrade.

Many of the companies that contact Ambacia Consulting about Serbia already have people here. A developer in Belgrade or a designer in Novi Sad, invoicing every month as a flat-rate entrepreneur, sometimes for years. It works, until an investor asks who owns the code, or the developer asks for a contract the bank will accept.

So which is better, freelance or EOR in Serbia? It depends on how the person actually works. Here is what decides it, and what changes when a contractor becomes an employee through an Employer of Record.

Two kinds of freelancer, two sets of rules

Most Serbian freelancers working for foreign companies are registered entrepreneurs (preduzetnici), usually on flat-rate tax (paušal), which is available up to RSD 6 million in annual turnover. Others are not registered at all: they are paid directly from abroad and declare their income quarterly through the Tax Administration's Frilenseri portal. The difference matters, because Serbia's independence test applies only to the first group.

The independence test: five out of nine is too many

Since 1 March 2020, Article 85 of Serbia's Law on Personal Income Tax has treated an entrepreneur as not independent if, within 12 months, the relationship with one client meets at least five of these nine criteria (Test samostalnosti preduzetnika):

1. The client sets working hours and time off.
2. The work happens on the client's premises, or where the client decides.
3. The client provides training.
4. The person was found through a job ad or a recruitment agency.
5. The client supplies the basic tools and directs the work.
6. 70% or more of the person's income comes from this client.
7. The work is core to the client's business, with no business risk for the entrepreneur.
8. The contract stops them working for other clients.
9. They worked 130 days or more for the client in 12 months.

A typical case (a composite, not a single client): two Belgrade developers, 18 months with a German SaaS company. Daily stand-up at 9:30, company laptops, no other clients, a non-compete in the contract. That is five criteria (1, 5, 6, 8 and 9) before anyone reads the rest.

If the test fails, the income is taxed again as "other income": 20% income tax plus a 24% pension contribution on the gross amount, with no deduction for costs. The Tax Administration can go back five years, and interest is added.

Here is the part most EOR websites skip: when the client is foreign, the entrepreneur pays this bill, not you. That does not make it someone else's problem. A developer facing back taxes will ask you to cover them, raise their rate or start looking for another job.

Who owns the code?

This is the question investors ask, and where employment has a real legal edge. Under Article 98 of Serbia's Law on Copyright and Related Rights, the employer becomes the permanent holder of the economic rights in software an employee writes on the job. A freelancer's rights move only through a written contract, and Serbian law is strict about it: unclear transfers are read narrowly, a transfer of all future works is void, and moral rights cannot be transferred at all.

At Ambacia Consulting, the employment contract includes an IP clause written for Serbian law, and our service agreement passes those rights on to you. One step people often miss: code written before the switch is still governed by the old contractor agreement. We recommend a short confirmatory IP assignment between you and the developer, signed on or before the start date.

What it really costs

The most common mistake we see is budgeting the contractor's invoice as the salary. If a developer keeps about €3,400 a month today, matching that as an employee in 2026 means a gross salary of about RSD 565,000 and a total employer cost of about RSD 650,600 (roughly €5,540), once contributions and 10% income tax are counted, before our fee.

Employment costs more, and no honest provider will tell you otherwise. You get a clean tax position and clear IP. The developer gets a pension record, paid leave, sick pay and a payslip the bank will accept. The full 2026 breakdown is in our cost guide for EU companies.

Euro figures at the National Bank of Serbia middle rate of RSD 117.49 per euro, 2 October 2026.

How Ambacia Consulting moves a contractor onto employment

1. Review. We go through the nine criteria with you and agree a gross salary in dinars.
2. Contracts. A Serbian or bilingual employment contract with Ambacia Consulting, and a service agreement with you.
3. Clean cut-off. The last invoice covers work up to the day before employment starts.
4. Registration. We register the employee with CROSO, Serbia's social insurance registry, before their first working day.
5. Payroll. We run monthly payroll, file the PPP-PD tax return and send you one invoice.

Once we have the details, onboarding usually takes a few business days. You keep managing the work; we handle the employment.

When freelance is still the right call

If the person has several clients, their own equipment, project or fixed-price work and control over their hours, keep the contract. The independence test is not a ban on freelancers. It simply describes what an employee looks like.

Frequently asked questions

Can a foreign company hire a freelancer in Serbia?

Yes, without a local entity. The risk starts when the relationship looks like employment. For registered entrepreneurs, meeting five of the nine independence test criteria means the income is taxed again as other income.

Who pays if a Serbian contractor fails the independence test?

With a foreign client, the entrepreneur pays: 20% tax and 24% pension contribution on the gross amount, plus interest. In practice, the cost often comes back to the client through higher rates or staff turnover.

Is EOR more expensive than a freelancer in Serbia?

Usually, yes. Matching a take-home pay of about €3,400 costs around €5,540 a month in 2026, before the EOR fee. The difference buys employment rights for the person and a clean tax and IP position for you.

Paying people in Serbia on invoices? Score each relationship against the nine criteria. If you count five or more, talk to us before the Tax Administration does the counting.

Ambacia Consulting d.o.o., Svetogorska 7L, 11000 Belgrade | info.rs@ambacia.eu | Book a call

General information based on Serbian legislation as of October 2026, not legal or tax advice for a specific case.