What a civil contract is
“Civil contract” is a collective term for the contracts by which one party assigns to another the performance of a specific task or service for remuneration. Unlike the employment contract, it is not governed by the Labour Code but by the Obligations and Contracts Act and by the Commerce Act. The parties to it are referred to as the principal and the contractor.
In practice, “civil contract” most often refers to a contract for work or a contract of mandate, but the group also includes the commission contract and commercial representation contracts. What they have in common is that they are concluded to achieve a specific result, rather than for the provision of labour under the direction of an employer.
What the contract contains
To be clear and defensible in the event of an inspection, a civil contract should contain at least:
- a precise description of the task or service being assigned;
- a deadline for performance;
- the rights and obligations of the principal and the contractor;
- the amount of the remuneration and the deadline for its payment.
Civil contract versus employment contract
The two types of contract are governed by different laws and lead to different rights and obligations. The table below summarises the main differences:
| Criterion | Civil contract | Employment contract |
|---|---|---|
| Legal basis | Obligations and Contracts Act, Commerce Act | Labour Code |
| Subject matter | A specific result — a task or service | Provision of labour for a given position |
| Working time and place | Not fixed — the performance deadline matters | Fixed as mandatory |
| Registration with the NRA | Not subject to registration | Registered with the NRA |
| Paid leave and sick leave | Not granted | Granted |
| Insured risks | Pension and health only | Full scope, incl. maternity and unemployment |
| Length of service | Not counted (insurance service is counted) | Counted as length of service |
| Minimum remuneration | No statutory minimum | No lower than the minimum wage |
The contractor under a civil contract does not benefit from the protection of labour law — no right to paid annual leave, to sick-leave benefit, to maternity benefit or to unemployment benefit. In return, the civil contract offers greater flexibility for both parties. For more on the alternative, see our article on the employment contract.
Taxation of the civil contract
Income under a civil contract is taxed under the Personal Income Tax Act (PITA) as income from non-employment relationships. Taxation goes through two steps.
Statutory recognised expenses — 25%
Before taxation, statutory recognised expenses of 25% are deducted from the gross remuneration (Art. 29, para 1, item 3 PITA). This is an expense that the law recognises automatically, without the need to prove it with documents. Only the remaining part of the income is taxed.
Tax rate — 10%
A tax of 10% is due on the taxable income — the flat rate of personal income tax. It is important to note that the tax base is formed after the statutory recognised expenses and the social security contributions payable by the contractor are deducted from the income. The amount actually taxed is therefore lower than the gross remuneration.
Social security contributions under a civil contract
The contractor under a civil contract is insured for fewer risks than an employee under an employment contract. Contributions are due only for pension and for health insurance — but not for general illness and maternity, for unemployment, or for occupational accident.
The amount on which contributions are due
Social security contributions are calculated on the remuneration after deducting the 25% statutory recognised expenses — that is, on 75% of the gross amount. This amount is called the insurable income, and two thresholds apply to it:
- Lower threshold. If the insurable income is below the minimum wage (EUR 620.20 for 2026) and the person is not insured on another basis, no contributions are due.
- Upper threshold. Contributions are due up to the maximum insurable income, which for 2026 is EUR 2,300 per month. If the person is already insured on another basis up to this maximum, no contributions are withheld on the remuneration under the civil contract.
The amount of the contributions
The total social security burden under a civil contract is 27.8% of the insurable income, split between the two parties:
| Contribution | Payable by the principal | Payable by the contractor |
|---|---|---|
| Pension fund and supplementary pension insurance | 11.02% | 8.78% |
| Health insurance | 4.80% | 3.20% |
| Total | 15.82% | 11.98% |
For persons born after 1959, part of the pension contribution (five percentage points) is directed to a universal pension fund, but the total amount and the split remain the same. Pensioners who work under a civil contract owe only the health insurance contribution as mandatory; pension contributions for them are optional.
How the net remuneration is calculated
Let us follow the calculation for gross remuneration of EUR 1,000 for a contractor who is not a self-insured person and is not insured on another basis:
- Statutory recognised expenses (25%): 1,000 − 250 = insurable income EUR 750.
- Contributions payable by the contractor (11.98% of 750): EUR 89.85.
- Taxable amount: 750 − 89.85 = EUR 660.15.
- Income tax (10%): EUR 66.02.
- Net amount for the contractor: 1,000 − 89.85 − 66.02 = EUR 844.13.
To this the principal adds the contributions payable on its own account — 15.82% of EUR 750, or EUR 118.65. The total cost for the principal is therefore 1,000 + 118.65 = EUR 1,118.65.
Reporting and deadlines
Where it withholds contributions and tax, the principal also assumes the obligations to report them:
- Social security contributions — reported monthly via declarations Form 1 and Form 6, by the 25th day of the month following the month in which the remuneration is paid.
- Advance tax — reported quarterly via the declaration under Art. 55 PITA and paid by the end of the month following the quarter. For the fourth quarter the principal does not withhold advance tax, unless the contractor requests this in writing.
- Annual tax return — the contractor files a return under the PITA by 30 April of the following year, including income from all relationships for the calendar year.
For the amounts paid during the year, the principal issues the contractor a statement, which makes it easier to complete the annual return.
The risk of a disguised employment contract
A civil contract must not be used to disguise what is in fact an employment relationship. Where the contractor in practice works at a fixed working time and place, under the direction of the principal and for regular monthly remuneration, the relationship bears the hallmarks of an employment contract — regardless of how the document is titled.
On inspection, the Executive Agency “General Labour Inspectorate” may find that a disguised employment contract exists and may oblige the principal to conclude an employment contract retroactively. This entails significant penalties, additional payment of social security contributions and benefits. A civil contract should therefore be used only where the nature of the work genuinely corresponds to a non-employment relationship. For more on the subject, see our article on the disguised employment contract.
Frequently asked questions
Income under a civil contract is taxed with personal income tax at a rate of 10%. Before taxation, 25% statutory recognised expenses and the social security contributions payable by the contractor are deducted from the remuneration, so the tax is due on a smaller amount than the gross remuneration.
Yes. Contributions are due for pension and for health insurance — a total of 27.8% of the insurable income, split between the principal (15.82%) and the contractor (11.98%). No contributions are due for general illness and maternity, for unemployment, or for occupational accident.
No contributions are due where the remuneration, after deducting the 25% statutory recognised expenses, is below the minimum wage (EUR 620.20 for 2026) and the person is not insured on another basis. No contributions are withheld either where the contractor is a self-insured person who has declared this in writing, or where the person is already insured up to the maximum insurable income (EUR 2,300 for 2026).
Both the contributions and the tax are calculated after 25% statutory recognised expenses have been deducted from the gross remuneration. Contributions are due on this 75% of the amount (within the minimum and maximum insurable income), and the tax — on 75% of the amount, further reduced by the social security contributions payable by the contractor.
No. The contractor under a civil contract does not benefit from the protection of labour law — no right to paid annual leave, nor to benefit for temporary incapacity for work, for maternity or for unemployment. These rights arise only under an employment relationship.
No. The period under a civil contract is not counted as length of service, but where social security contributions have been paid it is counted as insurance service, which is relevant for retirement.
Yes. If the work is in fact carried out at a fixed working time and place, under the direction of the principal and for regular remuneration, the control authorities may find that a disguised employment contract exists. The principal may then be obliged to conclude an employment contract and to pay additional contributions and benefits, alongside the imposition of penalties.
Need Assistance?
The Innovires Legal team can draft a civil contract tailored to your specific situation, assess the tax and social security implications, and represent you in an inspection by the control authorities.