On October 18, 2021, Tax Authority announced on its website that it will start with audits of the lump-sum taxed self-employed persons. The aim of these audits is to determine whether provision of services by a self-employed person represents a conceived employment relationship whereas a person would register as the lamp-sum taxed self-employed person and would enter into an ongoing agreement for provision of services with a company in order pay less taxes and contributions to the State.

The Tax Authority did not specify if the controls relate only to certain business fields, however, from numerous newspaper articles one can understand that the IT sector will certainly be under the loop.

Tax Authority will start these audits by sending a questionnaire about doing business (Questionnaire NR) to self-employed persons and based on which it should be able to determine whether a self-employed person is an independent service provider or it is deemed an employee of a company. A model of the NR questionnaire is available here. If the Tax Authority determines that the activity of a self-employed person has prevailing characteristics of an employment relationship, such entrepreneurs will be obliged to asses and pay taxes and contributions which apply to employment contracts.

Finally, we can expect that the content of the Questionnaire NR will become an important guideline and reference in structuring business relationships with persons which provide services to a company on ongoing basis.