Skip to content
AdvokatX
Menu
Try it free

Service contract in Serbia (ugovor o delu): contents, tax and contributions

Ugovor o delu, the Serbian contract for services: when it may be used, what it must contain, and how tax and contributions are calculated, with an example.

INFO
Short answer. A contract for services (ugovor o delu) is a contract by which the contractor undertakes to independently perform a specific job or make an item, and the client undertakes to pay a fee for it. It does not create an employment relationship. Under the Labour Law (Zakon o radu) an employer may conclude it only for work outside its own business activity, and in writing. The fee is subject to 20% income tax and a 24% pension and disability (PIO) contribution on a base reduced by 20% standardised costs, and to a 10.3% health insurance contribution only if the contractor is not insured on another basis.
ROK
Deadline. When the payer is a legal entity or a sole trader, tax and contributions are calculated and paid by withholding at the moment the fee is paid, together with the PPP-PD return. When the fee is paid by a private individual, the contractor files the PP OPO return themselves within 30 days of receiving the income. (Art. 85(1)(1) and 85(3), Art. 86(1), Art. 99(1)(9) and Art. 100a(1)(2) of the Personal Income Tax Law (Zakon o porezu na dohodak građana).)

What an ugovor o delu is

The ugovor o delu is governed by two statutes. The Law on Contracts and Torts (Zakon o obligacionim odnosima, Art. 600 to 629) defines it as a contract by which the contractor undertakes to perform a specific job, such as making or repairing an item or carrying out physical or intellectual work, and the client undertakes to pay a fee for it. The Labour Law (Zakon o radu, "Sl. glasnik RS", No. 24/2005 ... 109/2025 - other law) sets out in Art. 199 when an employer may use this contract: only for work outside its business activity, where the object is the independent making or repair of an item or the independent performance of physical or intellectual work.

The key difference from an employment contract is independence. The contractor owes a result, organises the work themselves and is not part of the client's working hours and hierarchy. For short-term work within the employer's business the law provides other contracts, for example the contract on temporary and occasional work.

What an ugovor o delu must contain

The essential elements are the job and the fee. In practice disputes turn on three questions: what exactly was ordered, by when, and whether the fee was agreed gross or net. The job is therefore described as precisely as possible, and the word "gross" or "net" is written next to the fee.

The Law on Contracts and Torts contains rules that apply unless the contract says otherwise:

  • the client may supervise the work and give instructions, but may not manage the contractor as an employee,
  • the client must inspect the completed work as soon as possible and notify the contractor of defects without delay,
  • the client notifies the contractor of a hidden defect as soon as possible, and at the latest within one month of discovering it. Once two years have passed since acceptance of the work, the client can no longer rely on defects (Art. 615). Court protection can be sought within one year of the notice (Art. 616),
  • the client may terminate the contract at any time until the work is finished, but then owes the agreed fee reduced by the costs the contractor saved (Art. 629).

How tax and contributions on an ugovor o delu are calculated

For the contractor, the fee under an ugovor o delu is "other income" under Art. 85 of the Personal Income Tax Law. The calculation runs in this order:

  1. The gross fee is reduced by standardised costs of 20%. The remainder is the base.
  2. Income tax: 20% of the base.
  3. PIO contribution: 24% of the base.
  4. Health insurance contribution: 10.3% of the base, only if the contractor is not insured on another basis (Art. 44 of the Law on Contributions for Mandatory Social Insurance, Zakon o doprinosima za obavezno socijalno osiguranje).
  5. The net amount paid out is gross minus tax and contributions.

Example for a gross fee of RSD 100,000: the base is RSD 80,000, tax is 16,000 and PIO is 19,200. An employee or a pensioner is paid RSD 64,800. For a person without other insurance, health insurance of RSD 8,240 is also calculated, so the net is RSD 56,560.

No unemployment insurance contribution is paid on this fee. When the client is a company or a sole trader, it calculates and pays all liabilities, files the PPP-PD return and pays the contractor the net amount. When the client is a private individual, the filing duty lies with the contractor.

Income under an ugovor o delu also enters the base for annual personal income tax if total annual income exceeds the statutory threshold, which is three times the average annual salary per employee (Art. 87 of the Personal Income Tax Law). For income earned in 2025 the threshold was RSD 5,439,096.

Common mistakes

  • The ugovor o delu is used for work within the employer's business or for work that is employment in every respect.
  • The contract does not say whether the fee is gross or net, so the parties dispute who bears tax and contributions.
  • The job is described vaguely ("various tasks as instructed"), which is risky both legally and for tax purposes.
  • Nobody settles who holds copyright in the result, for example in software, text or design. For copyright works a copyright contract is often concluded instead, which has different standardised costs.
  • Payment is made in cash, without a calculation and a return.
  • The contract is signed after the work is finished, with an earlier date.

A short overview of the clauses usually found in the contract: contracting parties, object of the contract, deadline, fee and payment, materials and costs, acceptance and defects, copyright, confidentiality, termination, dispute resolution. This is an overview of content, not a ready-made contract text.

Sources

What to do

  • Details of the client and the contractor, including the contractor's personal identification number (JMBG) and bank account number.
  • An exact description of the job or the item to be made: what the result is, of what quality and in what scope. An ugovor o delu is concluded for a result, not for working hours.
  • The deadline for completing the job and, where needed, deadlines for stages.
  • The fee: whether it is agreed as a gross or a net amount, when it is paid and whether it is paid in stages.
  • Who provides materials, tools and premises, and who bears those costs.
  • How the work is delivered and accepted, and the period for objections and for remedying defects.
  • Clauses on copyright in the result, confidentiality and termination, if the specific job needs them.

What it costs

An ugovor o delu is neither certified nor solemnised, so there are no notary costs. The cost is the tax burden on the fee. Standardised costs of 20% are recognised against the agreed gross amount, and on the remainder (the base) 20% tax and a 24% PIO contribution are paid. If the contractor has no health insurance on another basis, a 10.3% health insurance contribution is also paid. Net pay is 64.8% of the gross fee for an insured person and 56.56% for an uninsured one. The contribution rates are set by Art. 44 of the Law on Mandatory Social Insurance Contributions.

FAQ

How does an ugovor o delu calculator work, from gross to net?

The gross fee is multiplied by 0.8 to get the base. On the base, 20% tax and 24% PIO are calculated, plus 10.3% health insurance for a person not insured on another basis. Net is gross minus those amounts. In short: net is gross times 0.648 for an insured person, or gross times 0.5656 for an uninsured one. Going from net to gross means dividing by the same coefficient.

Does an ugovor o delu count towards years of service?

An ugovor o delu does not create employment, so there is no length of service within the meaning of the Labour Law. Because the PIO contribution is paid, the period for which it was paid counts as insurance service. Service is not counted by the duration of the contract: the amount of the agreed fee on which tax was paid is divided by the lowest monthly contribution base in force at the time of payment, and the result is the number of months of service. The Republic Pension and Disability Insurance Fund establishes this service ex officio at the end of the year, based on data from the tax returns.

Is there annual leave or sick leave under an ugovor o delu?

No. A contractor under an ugovor o delu is not an employee, so the Labour Law provisions on leave, sick leave, minimum wage and protection against dismissal do not apply. The parties' rights and duties are governed by the contract and the Law on Contracts and Torts.

Can an ugovor o delu be concluded for work within the employer's own business?

Art. 199 of the Labour Law allows an ugovor o delu only for work outside the employer's business activity. If the work is actually performed as employment (regular hours, instructions, a workplace at the employer's premises), there is a risk that the labour inspectorate or a court finds that it is an employment relationship.

Does a pensioner or an employed person pay health insurance on an ugovor o delu?

The 10.3% health insurance contribution is paid only for a person not insured on another basis. For an employee, a pensioner or a sole trader, the tax and the PIO contribution are paid.

Does an ugovor o delu have to be in writing?

When an employer within the meaning of the Labour Law concludes it, Art. 199 expressly requires written form. An ugovor o delu between two private individuals under the Law on Contracts and Torts has no mandatory form, but a written contract serves as evidence of the price, deadline and job description.