The Independence Test — How to Pass It

What is the independence test?

The test samostalnosti (independence test) is a set of criteria the Poreska uprava (Tax Administration) uses to determine whether an entrepreneur works as an independent service provider or as a de facto employee of a client.

It was introduced by the Personal Income Tax Act. If an entrepreneur "fails" the test, their income may be taxed as salary (a higher rate, with contributions borne by the employer).

The 9 test criteria

The Tax Administration assesses the following:

1. Direction and control — whether the client controls how and when you do the work (not just what the result is)
2. Working hours — whether you work fixed hours set by the client
3. Premises — whether you work predominantly at the client's premises
4. Tools and equipment — whether the client provides tools, software, a computer
5. Subcontractors — whether you may engage subcontractors without the client's approval
6. Exclusivity — whether you are barred from working for other clients
7. Integration — whether you are integrated into the client's organizational structure
8. 70% of revenue — whether more than 70% of your revenue comes from a single client over 12 months
9. Continuity — whether the business relationship has lasted more than 2 years without interruption

What does "failing" the test mean?

If you meet 5 or more criteria, the Tax Administration may:

• Reclassify your income as salary instead of service fees
• Impose salary tax (10–20%) and contributions (35,8%)
• Declare the client a tax debtor for the unpaid contributions

How to reduce the risk?

Practical tips:

• Work for multiple clients — ideally 3+ active clients
• Use your own equipment — laptop, software, tools
• Flexible working hours — do not work a fixed 9–17 schedule
• Written service agreement — a clearly defined deliverable, not a labor engagement
• Invoice the result — not "8 hours of work" but "Development of a web application"
• Engage subcontractors — at least once a year, on smaller tasks

A note on the 70% criterion

The criterion of 70% of revenue from a single client is the hardest for solo freelancers to satisfy. Recommendations:

• Actively seek at least one smaller client
• Document your diversification attempts (correspondence, proposals)
• If you cannot avoid the 70%, consult a tax advisor

Frequently asked questions

Q: If I have a single foreign client, does the test apply? A: Yes. The test applies regardless of the client's residency.

Q: What if I have a fixed monthly fee? A: A fixed fee is one indicator of dependent work, but on its own it is not sufficient for reclassification.