The Švarc System: When Could a Company Face a Fine of Over One Million Euros?

Does a salesperson in a shopping center always have to be an employee? According to Peter Varga, under certain circumstances, they can also work as a contractor.

This legal perspective runs counter to the prevailing narrative, but it is based on a thorough legal analysis and a systematic interpretation of the law, including in the context of the current state of the labor market and the tax and social security burden on employees and self-employed individuals.

In Highgate Talks #50, Peter Varga and Tomáš Demo of the Highgate Group discuss why the “Švarc system” cannot be evaluated in a mechanical way.

In this podcast, you’ll learn:

• when even a vendor at Eurovea can act as a contractor,
• What is the determining factor in distinguishing between an employee and a contractor,
• Why a fine from the Labor Inspectorate may not be the biggest risk,
• how an audit can lead to additional tax assessments and the payment of back social security and health insurance contributions,
• Why might the total value of contracts with multiple contractors exceed one million euros,
• Under what circumstances can the “Švarc” system also be considered from a criminal law perspective,
• Why current laws and tax and contribution regulations send conflicting signals to entrepreneurs.

Watch the entire episode of Highgate Talks and find out why, when evaluating the “Švarc” system, it’s not enough to rely solely on the name of the contract or the form of cooperation.