A person may engage in economic activities by being employed or conduct individual activities (freelancing). Freelancing is also regulated in detail and is only legally permissible when performed under either the business licence or individual activities certificate. The main difference between them is income tax calculation and payment – the fixed income tax for the business licence is being paid in advance, while the income tax related to the business activities under the individual activities certificate is calculated and paid at the end of the period in regards to the difference between income and expenditure.

A person conducting individual activities may conclude services or other civil agreements with any other legal or natural individual. Since the contractual relationship is of other nature than the employment relationship, those conducting individual activities are not bound to the mandatory requirements of the Labour Code; therefore, a freelancer is free to decide on the working time distribution, workplace, manner and measures needed.

The business licence is issued for a fixed term up to one year and that is a disadvantage comparing to the indefinite term of individual activities certificate. Freelancers acting under the individual activities certificate are even able to employ other persons.

While there is an open-ended list of different types of economic activities that might be carried out under the individual activities certificate, the business licence only enables freelancers to engage in certain activities and determines a limit of maximum income; therefore, the individual activities certificate might seem slightly more convenient for the freelancers.


Freelancing with an Individual Activities Certificate:

  • An individual must independently deal with activity-related issues and cover their own operating expenses;
  • A freelancer’s business relations with another party in terms of transaction should not feature characteristics typical of traditional employment relationships;
  • People engaged in individual activities pay tax on income, mandatory health insurance contributions, as well as state social insurance contributions.

Prior to commencing individual activities, a freelancer must inform the State Tax Inspectorate (VMI) and register with the Register of Taxpayers. Once a freelancer submits the application, it is then considered that they have informed the tax authority about the start of individual activities. The application must be submitted no later than the date of the commencement of activities. Acquiring an individual activities certificate is free of charge.