It has been quiet for some time around the Deregulation of Assessment of Employment Relationships Act (DBA Act), which, upon introduction, caused a great deal of unrest and discussion among self-employed contractors and their clients. This was the reason for the Tax and Customs Administration to stop actively enforcing it (with the exception of parties who really overstep the mark, more on that later) and to want to create a successor to the DBA Act.

State of affairs; update

In a letter to parliament from Minister Koolmees and State Secretary Snel, we again heard about the steps that have been taken in this context in recent months. Below is a brief summary of the four measures that are planned and when you can expect them.

1. The client’s declaration and the web module (ready by the end of 2019)

Current legislation gives clients and their contractors, particularly self-employed persons, insufficient clarity on in which cases there is, under the law, no employment relationship. That is why the cabinet is working on a web module (a question-based decision tree) with which it can be determined in advance whether there is no such employment relationship. The advantage of this is that the self-employed person and the client thereby get certainty in advance that no payroll tax needs to be withheld and no employee insurance premiums need to be paid. Of course, correct answers will then need to be entered, truthfully. Otherwise the certainty is a sham.

2. Clarification of the authority relationship (early 2019)

One of the major bottlenecks experienced when assessing the absence of an employment relationship is the authority criterion. Many self-employed persons and clients indicate that the current regulations are unclear on this point. The problem with this point is that clarifying this element is not a simple task. Many elements play a role because all facts and circumstances must be considered. It is therefore difficult to give general assessment rules. It is, however, possible to give indications and counter-indications for authority and to work with examples to clarify the authority criterion somewhat. By 1 January 2019 at the latest, an extensive explanation in the form of an appendix will be added to the Tax and Customs Administration’s Payroll Tax Handbook.

3. Employment contract at a low rate (aim: by 1 January 2021)

The Cabinet wants to prevent false self-employment and competition on terms of employment at the bottom end of the labour market. In the coalition agreement it was therefore agreed to offer more protection to self-employed persons at the bottom end of the labour market who work below a certain rate (15 – 18 euros per hour). The criteria for delineation are a low rate combined with a long duration (more than 3 months), or a low rate combined with regular business activities. This plan, however, runs into European law, since this measure probably infringes the freedom of establishment and the freedom to provide services of self-employed persons. This is regulated in the EU Treaty on the Functioning of the European Union (articles 49 and 56 respectively).

The Cabinet is nevertheless continuing with its plan to hold an internet consultation on this idea in the first half of 2019. Alternatives are also being worked out, since these are in line with European law. The aim is to have the idea (employment contract at a low rate, or the alternative) enter into force on 1 January 2021.

4. Opt-out for a high rate (aim: by 1 January 2021)

At the top end of the labour market, the aim is to give more certainty to self-employed persons with a higher hourly rate who consciously choose entrepreneurship. In the coalition agreement, an opt-out from payroll tax and employee insurance premiums has therefore been proposed for self-employed persons who work for a high hourly rate. This gives clients certainty that they will not subsequently be confronted with additional tax assessments. This point, too, like the employment contract at a low hourly rate, still needs to be worked out further. This will be converted into legislation together with the bottom-end measure (employment contract at a low hourly rate).

Conclusion

1. Enforcement of the DBA Act by the Tax and Customs Administration remains suspended until 1 January 2020 (possibly longer if the successor is not yet ready), with the exception of “malicious” parties. The Tax and Customs Administration understands this to mean cases where there is a deemed employment relationship or evident or intentional false self-employment. Think here of the discussions surrounding the self-employed persons working at PostNL, Deliveroo and via the cleaning platform Helpling.
2. The uncertainty about how self-employed persons and clients should structure their working relationship to eliminate the risk of tax reassessments will, unfortunately, unfortunately continue for some time.
3. Only in the longer term can changes be expected, such as the web module (which is expected to be ready by the end of 2019) or perhaps an automatic employment contract at a low hourly rate.
4. The question is also whether the web module, once ready, may already be used by Dutch businesses. Or must one wait until 2021, when the other measures are also expected to enter into force?
5. In the meantime, self-employed persons and clients alike would be wise to keep critically examining the other risks in their mutual contractual relationship. Think of clear agreements on remuneration, the exact description of the work/assignment to be carried out, the division or shifting of liability towards customers, responsibility for working conditions, the Chain Liability Act, termination of the assignment, non-solicitation and non-competition clauses, confidentiality, and compliance with mandatory legislation such as the GDPR privacy rules. Having a good template for an assignment agreement is, in that respect, not an unnecessary luxury for reducing your business risks. A conflict with your contractor or client can bring considerable costs and financial risks with it.

Would you like more information on this, or receive a no-obligation cost indication for such a screening? Contact H.M.E. (Hella) Vercammen LL.M. of The Legal Company B.V. via 020-3450152 or info@thelegalcompany.nl.