There’s A Freelancer Revolt Happening In Serbia Right Now
After the Serbian government demanded freelancers pay up to five years in back taxes – at a rate up to 80% – thousands took to the streets in protest. In the United States, Canada, and most of Western Europe, freelancers are considered small businesses. As such, they often get access to tax exemptions or other ways to deduct expenses in an effort to reduce taxes. That’s not the case in Serbia, and now freelancers are in revolt.
Freelancers first began receiving government notices to attend interviews with tax inspectors. From there, many received notices to pay back taxes, as first reported by Emerging Europe.
The key issues in Serbia
Freelancers are protesting two main things, according to on the ground reporting from the protest: tax rates and unfair worker treatment.
Many of Serbia’s neighbouring countries charge freelancers a tax rate between 10% to 14%. In other countries where taxes are higher, such as Greece, tax cuts have come into effect. By contrast, Serbian freelancers could end up paying 80% in income tax rates when charged at the highest marginal rate.
Usually, freelancers pay lower tax rates because they have no protections. Freelancers don’t have minimum wage legislation and they don’t have guaranteed healthcare benefits like an employee would, just to name two. So protesters are saying that an incredibly high marginal rate is not fair, since they are not afforded the same social services an employee might get when paying that rate. Further, they argue that the tax paying mechanisms have been opaque and difficult to navigate, making it hard for them to pay their taxes on time in the past few years. As such, charging interest and late fees now is unjust.
The problem in regards to taxation is how Serbia defines freelancers. According to new laws, freelancers will have to remit taxes almost immediately after getting paid, according to Emerging Europe. Without online payment options, many freelancers who are also digital nomads wouldn’t be able to pay taxes.
Another challenge for Serbian freelancers is the government itself. Amendments to the income tax act in 2020 make it more expensive for companies to hire freelancers versus employees. The Ministry of Finance now offers a tax incentive for employers who hire employees instead of paying freelancers.
Even with these changes, it seems the protests worked. After the protests on January 16th, government officials took meetings with freelancers to discuss the laws and practices.
Freelancer growth is on an upswing
Around the world, more people are seeking freelance work, whether full-time or in addition to jobs. That means issues like what happened in Serbia could easily crop up again. Since freelancing is lumped into small business legislations in many countries, individual freelancers could face a tough time.
That said, this example of legislating against freelancers in the way Serbia has could severely impact the country. Serbian freelancers could choose to leave, moving to any other country in Europe. The laws could also impact whether digital nomads choose to move to Serbia for any extended period of time. These types of laws are poignant when you consider other places – from Finland to Hawaii to Abu Dhabi – are offering incentives to bring in more freelance and remote workers.
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Header image source: Serbia.com