What is the difference between a service agreement and authorisation agreement?

A service agreement is focused on achieving a specific result (e.g., building a sauna, repairing a car, translating a book, cleaning a chimney). If the goal is not achieved (e.g., the sauna is not completed on time), it constitutes a breach of contract.

In the case of a contract for services, the service provider (e.g., a lawyer) must perform their duties properly and work towards achieving the goal (e.g., defending the client in the best possible way in court). If the goal is not achieved (e.g., the lawyer’s client loses in court), it does not constitute a breach of contract.

What is the difference between a service agreement and an employment contract?

In a service agreement, the contractor (the person doing the work) has greater independence in performing their tasks compared to an employee under an employment contract. The contractor can freely decide the time, place, and manner of performing the work. Unlike an employee working under an employment contract, the contractor is allowed to delegate the work to a third party. A service agreement does not have mandatory terms set by law (e.g., minimum wages, rest and work time regulations).

In an employment contract, the employee is more dependent on the employer and must follow the employer’s instructions and orders. The employee must personally carry out their work tasks.

Does the contractor have to fulfill their obligations under the service agreement personally?

The contractor must fulfill their obligations under the service agreement personally only if it is stipulated in the service agreement. Otherwise, the contractor can delegate the work entirely to a third party (a subcontractor). In this case, the contractor is responsible for the subcontractor's actions.

If a company (client) enters into a service agreement with an individual (contractor), what taxes must the company pay on the payment made to the contractor?

The company must pay income tax, social tax, pension contributions (if the person is part of the second pillar pension system), and unemployment insurance contributions on the payment made to the contractor.