Collaboration contract: what it is and when it is concluded

Self-employed persons are those who can enter into a collaboration contract. These include those who earn income from royalties and those who are self-employed professionals such as lawyers, doctors, architects, nurses, financial consultants, etc. They can also conclude a collaboration contract with a PFA, PFI, II and IF.

‍

The following information must be included in the content of the collaboration contract:

‍

Information on the identity of the parties (employer and provider);

Object of the contract;

Contract duration;

Remuneration;

Method of payment;

Rights and obligations of the parties;

Conditions for termination of the contract;

Possible penalties;

Depending on the type of work performed, other specific clauses.

‍

As the collaboration contract is a more specific one, you should also bear in mind the following points:

‍

You can have one or more collaboration contracts and be simultaneously employed under an individual employment contract;

You can't have an individual employment contract and a collaboration contract with the same company;

If you are an employer, make sure that the provider's services are not of a continuing nature as the relationship may be classed as an employment relationship and you may have to pay payroll tax;

As it is not regulated by the Labour Code, the contract does not contain any clauses on leave, and the provider does not have this benefit;

Remuneration for services rendered is received according to the project and contract specifications, either monthly or in instalments;

The collaboration contract ends at the end of the period set out in the document, but may be terminated early if the decision is by mutual agreement, or unilaterally if one of the parties has not fulfilled its obligations;

‍

Taxation of income from a collaboration contract

‍

In the case of a collaboration contract for royalties, income tax is withheld at source by the employer, who will pay 10% income tax to the state budget by the 25th of the month following the month in which it was withheld.

‍

For a collaboration contract where services have been rendered, the provider is responsible for tax obligations:

‍

If the provider is an LLC, then it is obliged to pay 3% income tax, or 1% if it has at least one employee plus taxes and income tax on wages of 47.25%;

If it is a collaboration contract with an individual, PFA, II or IF, then the provider pays 10% income tax, but also CAS and CASS contributions if his annual income exceeds the ceiling of 30,600 lei. Find out more about the taxation of a PFA in the following article.

‍

Save time on administrative tasks and digitise your workflow by using the Banqup platform for freelancers, entrepreneurs and SMEs. Get rid of countless paper documents and upload them electronically so you can use them anytime, anywhere. Use the Banqup app and you can easily send financial documents like invoices to your accountant.

‍