Netherlands: Update on New Legislation for Self-employed and Suspension enforcement of Tax Authorities
The Government has been working for years on new legislation for self-employed persons; how to define an independent contractor and an employee. In principle, the current law – the Assessment of Employment Relationships (Deregulation) Act – still applies. However, because this law turned out to be practically unworkable and new definitions of workers are still not implemented, the enforcement of tax authorities have always been suspended.
The Dutch Tax Authorities can take measures to impose additional tax assessments and fines on the parties if they find that the relationship between the independent contractor and the company is truly an employment relationship. However, the government clarified that the Dutch Tax Authorities shall still abstain from such measures until at least October 2021, for well-meaning entrepreneurs who reasonably apply the model agreements that are published on the website of the Dutch Tax Authorities. Freelancers who work under the terms of the model agreements (where possible) should therefore not be exposed to many risks. This is reassuring for some; although often the model agreements do not sufficiently cover the intended relationship between two professional parties. Furthermore, not all relationships fit within the model agreements.
In the meantime, several proposed measures have lapsed (including an obligatory minimum fee for independent contractors), leaving only the web module as a possible measure. The web module is an instrument with which the Government aims to provide clarity and, where possible, provide certainty about the qualification of the employment relationship for tax purposes. In the web module, the company needs to answer a questionnaire. If, on the basis of the answers to the questionnaire it appears that it is possible to work outside employment, the principal will receive a principal’s statement. However, this statement does not guarantee that, based on the actual execution of the working relationship, an employment contract is in place.
The distinction between the qualification as self-employed and as an employee is important in view of the large difference in treatment between self-employed contractors and employees, related to taxes and of course the applicability of employment law.
A pilot of this web module is expected to start on 11 January 2021 and will last six months. After the pilot there will be an evaluation. Based on the evaluation a decision will be made about the possible introduction of the web module. We will of course keep you informed of the developments.
For more information on these articles or any other issues involving labour and employment matters in the Netherlands, please contact Christiaan Oberman (Partner) of Palthe Oberman at firstname.lastname@example.org or visit www.paltheoberman.nl.