If a Serbian company wants you and offers a choice, take the employment contract. Not because the arithmetic always favours it — sometimes it does not — but because contracting into a local company is the arrangement that sits most squarely in front of the independence test, and because employment moves the entire administrative burden onto somebody whose job it is.
The exception is narrow and real: if you have several clients, one of which happens to be Serbian, and this is genuinely one engagement among many, contracting is fine and normal. The problem is never contracting. The problem is contracting into a single company that behaves like your employer.
Checked on 2 September 2026.
The two arrangements
Employment is an ugovor o radu. You are on payroll. The company computes and pays your tax and contributions, registers you for social insurance, and carries the labour-law obligations — notice, leave, sick pay.
Contracting is you as a registered preduzetnik issuing invoices to the company for services. You carry your own tax and contributions, your own registration, and no labour-law protections.
There is a third thing people confuse with contracting — a contract for work (ugovor o delu) signed by you as an individual, without a business — and it is a different instrument with different tax treatment and a much narrower legitimate use. If a company offers you that for ongoing work, that is a question for a knjigovođa before you sign, not a variant of the two options above.
What each one costs, on the published rates
Employed. For 2026: salary tax is 10% on gross above a non-taxable monthly amount of 34,221 RSD — up from 28,423 RSD in 2025, and republished annually, so check the current figure rather than carrying this one forward. Employee contributions are 19.90% of gross — PIO 14%, health 5.15%, unemployment 0.75% — withheld from your pay. The employer pays 15.15% on top: PIO 10%, health 5.15%.
You do nothing. The money arrives net, and your health insurance status exists without you arranging it.
Contracting as a paušalac. Your bill is not derived from what the company pays you. It comes from the Poreska uprava’s rešenje, computed from a municipal formula, at 10% tax plus contributions of PIO 25.5%, health 10.3% and unemployment 0.75% on that formula base. Which means the comparison is not rate-against-rate; it is a variable bill against a fixed one, and which wins depends entirely on the numbers. The work status decision, priced does that comparison properly.
Two costs that are easy to leave out of the contracting side: the registration and the ongoing administration — the KPO book, the invoices, the bank allocations, whichever consultations you buy. None of it is heavy, and all of it is time that employment does not cost you.
The test is the reason this post exists
The nine criteria apply to your relationship with one nalogodavac. Contracting into a single Serbian company is the arrangement most likely to meet five of them, and several of the nine are met almost automatically when the company is local:
- The client’s premises — if you go to their office, that is criterion 2. A remote worker invoicing a foreign client usually escapes this one. Someone working in a Belgrade office does not.
- The client’s equipment — a company laptop and a company desk is criterion 5.
- Hours and leave — a Serbian office with core hours and a leave calendar is criterion 1.
- 70% of income from one client — criterion 6, arithmetic.
- 130 working days in 12 months — criterion 9, arithmetic.
That is five without anybody trying. This is the honest reason the answer here differs from the answer for someone invoicing a client abroad: the same contracting arrangement is much more exposed when the client is down the road.
If the company’s own proposal is that you register as a preduzetnik and invoice them for what is plainly a job, they are proposing an arrangement whose tax risk lands on you. That is worth saying out loud in the negotiation rather than after it.
The permit, which is where the real asymmetry is
Your work status and your residence basis are usually the same decision, and the two routes fail differently.
Employed. A foreigner working here needs a residence approval and a work authorisation, obtained since 2024 through one procedure — the Unified Permit. On the employment route, most of that file is the company’s documents rather than yours. That is a real advantage and people undervalue it. The disadvantage is symmetrical: your permission to be here is attached to a job. Leaving the job is not just a career event.
Contracting. Self-employment supports a different basis, and the file is yours to build and yours to renew. More work, more independence, and no employer whose HR department can get it wrong on your behalf.
Which is better depends on how likely you are to change your circumstances in the next two years. If you expect to stay with one employer, employment is simpler and its downside is theoretical. If you expect your client mix to change, the basis that does not depend on one company is worth its paperwork. The legal bases sets out which is which, and where two are arguable it is a clear case for one hour of an advokat's time.
Health cover: same entitlement, different amount of work
Both routes pay health contributions — the employee’s 5.15% plus the employer’s 5.15% on one side, the paušalac’s 10.3% on the other — so neither leaves you outside the system. What differs is who does the arranging.
Employed, the company registers you and your insured status follows from payroll. You will still have to go and collect the card itself, but the status behind it exists without your involvement.
Contracting, the status follows from your own contributions being paid, which means it follows from you paying them on time. A missed month is your problem in a way it never is on payroll.
Neither route is the one that decides what care you can actually get or what it costs — that is a separate subject with its own set of posts, starting at public, private, and what you are entitled to. The point here is only that “employment includes health insurance and contracting doesn’t” is wrong, and people turn down contracting for that reason.
Questions to ask before you accept either
If they offer employment:
- Is the salary quoted neto or bruto? Ask explicitly. This is the most common misunderstanding in a Serbian job offer and it is a large number.
- Is it a fixed-term or open-ended contract, and what is the notice period?
- Have you employed a foreigner before? A company doing this for the first time will get something wrong, and the cost lands on your timeline rather than theirs.
- Who prepares the permit file, and who pays the fees?
If they offer contracting:
- Why contracting rather than employment? Listen to the answer. “It is simpler for us” means the simplification is the transfer of risk to you.
- Will the contract contain a business-risk clause, and will it be free of any restriction on serving other clients? Those are criteria 7 and 8, in writing, and they are negotiable.
- Whose equipment, whose premises, whose hours?
- Will they cover the cost of the accounting advice you now need? Sometimes yes, if you ask before you agree.
The call
For an ongoing, full-time role at one Serbian company: employment. It is the arrangement the relationship actually is, the permit file is mostly theirs, and it removes an exposure you would otherwise carry alone.
For a genuine engagement among several: contracting, registered properly, with the contract read against the nine criteria first.
For an arrangement that is a job wearing invoices: neither, until it is one or the other. That is the sentence a relocation agency or a payroll provider has no reason to write, and it is the whole argument of this post. If the company insists on the invoice version and the facts say employment, you are being asked to hold a risk on somebody else’s behalf, and the correct response is a conversation, not a signature.