As from 1st May 2016, the (VAR (Declaration of Independent Contract Status or Verklaring Arbeidsrelatie) is no longer valid. You no longer have to prove to the Dutch Tax Authorities (Belastingdienst) that you are an entrepreneur, but more that the working relationships you have with your clients are not employment. Confused? So were we, but we’ve been looking into it for you.
The rise in self-employed people without personnel (ZZP) has led to new legislation, the DBA-law (wet Deregulering Beoordeling Arbeidsrelaties). In English, this means that per May 1st, you do not have to be an entrepreneur, but your working relationship with your client has to be entrepreneurial. The reason given by the present coalition is to protect those people that should be safely employed, but are forced to be self-employed (i.e. parcel deliverers, health workers) with all it risks.
So, as from 1 May 2016, your VAR is no longer valid. What you need is proof that the working relationship you have with your client is not employment. How do you do that? Well, there are three criteria that apply for the Dutch Tax Authorities:
- Payment: is it a wage?
- Supervision: does the contractor require supervision? I.e. does the customer have a say about what and how the contractor operates?
- Deliverables: is it impossible to replace the contractor without this affecting the work?
If the answer to all three is yes, the relationship is classed as employment and the client is responsible for withholding taxes. We expect some public debate on these criteria and nobody knows how strictly tax inspectors are going to enforce the new law. Chances are they focus on the vulnerable groups first, the aforementioned proverbial package deliverers.
Still, safest bet is to have your working relationship covered by a model agreement. It is the client’s responsibility to draw up such an agreement. There are templates available that are approved by the Dutch Tax Authorities. Just make sure that before you sign, the model agreement that does not hold you responsible for the risks of tax reassessments and fines. You do not have to be responsible for those! The new law is supposed to protect freelancers and ZZP-ers.
Looking after our Talent
As from 1st May 2016, Aquent will use model agreements to clarify the relationship between Clients, Talent and third parties. These model agreements will be conform to the Tax Authorities’ requirements. We will also have updated our Freelancer Services Agreement and our Client General Terms and Conditions to satisfy the legal requirements to specify a working relationship. Basically, we will make sure that when you work for us, the paperwork is all taken care of. But it does not free you from responsibility. You still have to work 1225 hours per year as an entrepreneur to qualify for the private business ownership allowance (zelfstandigenaftrek). It is therefore in your best interest to be aware of the new rules and your other clients have to learn them too.
Reach out to us if you have any questions and we will do our best to share what we know with you.