Source: https://rivet.global/blog/austria-company-paying-contractors-in-eastern-europe
Published: 2026-09-14 · Updated: 2026-09-14 · By William Sunjo M.

# Paying contractors in the Western Balkans and Eastern Europe from an Austrian company

Austrian companies often hire developers and engineers in Serbia, Bosnia, Romania and nearby. Status risks, reverse charge VAT, paperwork and paying in local currency.

## Key takeaways

- Services bought from foreign contractors usually fall under the reverse charge, so the Austrian company accounts for the VAT.
- Long-term, exclusive, full-time contractor arrangements can be reclassified as employment, in Austria or in the contractor's country.
- Serbia, Bosnia and Herzegovina and others outside the euro area receive euro transfers converted by local banks.
- Paying in dinars, marks or lei on local rails means contractors receive the invoiced amount.

A Vienna industrial software company has eight contractors: three in Belgrade, two in Sarajevo, two in Cluj-Napoca and one in Ljubljana. The arrangement makes sense: a short flight away, the same time zone, strong engineering schools. The paperwork is where Austrian companies get caught, and the payments are where the contractors quietly lose money.

## VAT: the reverse charge

When an Austrian company buys services from a business abroad, VAT usually shifts to it under the reverse charge. The contractor's invoice should carry no Austrian VAT. For EU contractors, such as those in Romania or Slovenia, it shows their VAT number and refers to the reverse charge. For Serbian or Bosnian contractors, it states the service is invoiced to a foreign business.

The Austrian company declares the VAT and, if it has full input VAT deduction, deducts the same amount. The net is zero; the entries must still be there.

## Status

Austrian law distinguishes a Werkvertrag (contract for a result) from a Dienstvertrag (employment). Serbia, Romania and others have their own tests. The risk rises when a contractor works full time for one company for years, follows its schedule and sits in its team.

The safeguards are the familiar ones. Define deliverables, let contractors use their own tools and hours, accept that they may have other clients, and pay against invoices rather than a fixed monthly sum regardless of output.

## Currency

Slovenia, Montenegro and Kosovo use the euro. Elsewhere, a euro transfer is converted by the contractor's bank:

- Serbia: dinars (RSD). Euro is widely used for pricing, but salaries and bills are in dinars.
- Bosnia and Herzegovina: convertible marks (BAM), pegged to the euro under a currency board.
- Romania: lei (RON).
- North Macedonia: denars (MKD).

Even with the Bosnian mark pegged, the receiving bank's conversion and fees reduce what arrives. Paying in local currency on a local rail lands the invoiced amount.

## Records

Keep the contract, each invoice and proof of payment showing the amount and rate. A month of eight payments in four currencies is much easier to reconcile when each confirmation carries its rate.

## Paying into Austria: the local rail

| What | Detail |
|---|---|
| Local rail | SEPA Instant Credit Transfer |
| Run by | European Payments Council scheme, run by each bank |
| Settlement | Under ten seconds, 24/7 |
| Published fee | By the EU Instant Payments Regulation, no more than the bank charges for a standard SEPA transfer |

Source: [European Payments Council: SEPA Instant Credit Transfer](https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-credit-transfer). Checked when this guide was last updated; the scheme's own page has the current figures.

## Where Rivet fits

A Rivet business account pays contractors in 120+ countries, on local rails where available, from euro, dollar and other balances. Bulk payouts send the whole month in one batch, and from the Growth plan a second approver can be required. Every payment shows its rate before you confirm and keeps it on the statement. Rivet is not a bank; regulated partner institutions hold the funds.

See also [paying a remote team abroad](/blog/paying-a-remote-team-abroad).

## Questions

### Do I charge or pay VAT on a Serbian contractor's invoice?

The contractor's invoice should not include Austrian VAT. Under the reverse charge, the Austrian company declares the VAT and, with full input VAT deduction, deducts it in the same return.

### Can contractors abroad be treated as employees?

Yes, if the facts look like employment: fixed hours, integration into the team, one client, no own business. Serbia and Romania apply their own tests too. Contracts and practice should show independence.

### Should I pay Western Balkan contractors in euros?

Many accept euros, and in Montenegro and Kosovo the euro is used. In Serbia, Bosnia and North Macedonia, local currency on a local rail avoids conversion by the contractor's bank.

### What records should I keep?

The contract, an invoice per payment, proof of payment and the exchange rate used, plus the contractor's tax identifiers.