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Government support for entrepreneurs

The coalition agreement 2017: the consequences for entrepreneurs

This information is provided by: Netherlands Enterprise Agency

The coalition agreement for the Dutch cabinet for 2017-2021, led by Mark Rutte, has been announced. The agreement was given the title 'Confidence in the future'. This is an outline of the temporary measures and consequences for freelancers, small and medium-sized business owners, and other types of entrepreneurs.

Taxes

  • The low rate of VAT will rise from 6% to 9%.
  • Corporation tax will be reduced.
  • Dividend tax will be abolished.
  • In order to counteract tax avoidance schemes involving shell companies, a withholding tax will be levied on outgoing flows of interest and royalties to low-tax jurisdictions.
  • Businesses will be encouraged to use more of their own capital and limit tax advantages for loan capital.

Obligation to pay wages during sick leave

  • The period during which small companies (up to 25 employees) are required to continue paying wages to employees on sick leave will be reduced from two years to one year.

Dismissal law

  • Employers sometimes find themselves in situations where none of the individual grounds for dismissal offers a sufficient legal basis for terminating an employee’s contract, but there are various problems related to multiple grounds for dismissal (for instance, culpable actions combined with unsatisfactory performance and an impaired working relationship). In such cases, it should be possible to ask the court to consider whether the employer should be required to maintain the employment contract or whether dismissal is warranted on the basis of the totality of circumstances specified in the different grounds. The court may award an employee dismissed on the cumulative ground extra compensation of up to half the transition pay (in addition to the standard transition pay to which the employee is already entitled).
  • The two-year waiting period will be repealed so that employees are entitled to transition pay from the start of their employment contract.
  • For each year of service employees will be entitled to transition pay in the amount of one-third of a month’s salary; this rule also applies to employees who have been in service for more than 10 years. The transitional arrangement for employees aged 50 and older will remain in place.
  • The possibilities for deducting training costs from transition pay will be expanded.
  • Employers will be compensated for transition payments to employees whose contracts are terminated due to long-term incapacity to work. The transition pay obligation in cases of dismissal for economic reasons will be eliminated if a collective scheme applies. In addition, the eligibility criteria for the transition pay transitional scheme for small employers will be eased and simplified. The government will also put forward proposals for compensating businesses, under certain conditions, that incur transition pay obligations when they terminate their company for reasons of retirement or illness.

Trial period

  • When the first contract an employer offers a new employee is an open-ended contract, an extended probationary period of five months will apply. A three-month probationary period will apply to multi-year contracts exceeding two years.

Payrolling

  • 'Payrolling' arrangements will remain possible, but only as an instrument to make things easier for employers rather than a way for businesses to use employment conditions to gain an edge on the competition. The government will prepare a bill that declares the more flexible regime under labour law applying to temporary contracts with employment agencies invalid and requires at least equal treatment in terms of primary and secondary employment conditions for temporary workers compared with workers employed directly by the hirer; the definition of a temporary contract with an employment agency will remain the same.

Zero-hour contracts

  • With respect to zero-hour contracts, the government wants to prevent workers being subject to permanent availability requirements where the work involved does not warrant them. In many sectors, good arrangements have been made in this respect. Nevertheless, undesirable situations exist in which unwarranted availability requirements make it difficult for workers to accept other part-time jobs. To counteract this, in such situations workers will not be required to respond to work calls immediately (or within a certain period) or workers will be entitled to payment of wages if a shift is cancelled.

Working as a self-employed professional

  • The Assessment of Employment Status (Deregulation) Act will be replaced. The new legislation must, on the one hand, assure genuine self-employed people and their clients that there is no formal employment relationship and, on the other, prevent false self-employment, particularly in the lower segment. Stakeholders will be involved in the development of the legislation and consideration will be given to enforceability and the impact on the administrative burden.
  • For self-employed persons without personnel, the rule will be that there is always an employment contract if the rate is low and the duration of the contract is long or if the rate is low and the work constitutes regular business activities.
  • In the top segment of the market, a facility will be introduced allowing self-employed people to opt out of salaries tax and the employee insurance schemes when they charge a high hourly rate in combination with a short-term contract or a high hourly rate for work that does not constitute regular business activities.
  • In addition, the government will examine ways of increasing the percentage of self-employed people who have incapacity insurance. It is important for self-employed people to be able to make a conscious choice about whether or not to insure themselves and for those who do choose to buy insurance to have access to the insurance market. The government will engage in dialogue with insurers in order to improve the kinds of insurance on offer.

Partner leave upon the birth of a child

  • The government is opting to substantially increase the length of (non-transferable) leave granted to partners on the birth of their child.
  • Under the current rules on partner leave, partners are entitled to two days of leave on full pay after the birth of a child, to be taken within four weeks. As of 1 January 2019, this will be extended to five days.
  • In addition, entitlement to supplementary partner leave of five weeks will be introduced as of 1 July 2020. During this period of leave, employees will receive an allowance from the UWV.

Modernising legislation

  • Legislation will be updated to help businesses respond better to social and technological developments through their products and services. Steps will be taken to limit the regulatory and administrative burden, such as extending the current business impact test to include an SME test.
  • The various inspectorates will work together more closely so that better enforcement goes hand in hand with a lower administrative and supervisory burden.
  • Appropriate rules will be drawn up and more scope will be created for businesses whose goals relate to civil society, while efforts will be made to maintain a level playing field.

Government contract procedures and payments

  • Government contract award procedures must be made more accessible to SMEs.
  • Central government always pays within 30 days and encourages businesses and other public and semi-public bodies to similarly improve their payment practices.

Improving innovativeness

  • SMEs deserve to play a more powerful role in innovation policy. The innovation credits for SMEs and the 'MIT scheme' (for stimulating cross-regional SME innovation in top sectors) will be expanded.
  • To remove obstacles (including national borders) to digital business, the government will work at EU level to create a European digital market.

A level playing field for businesses

  • The Competition Act will be amended to explicitly allow parties in the agriculture and horticulture sectors to work together, with a view to rectifying the power imbalances in the chain.
  • Government has a great deal of public information of a general nature at its disposal. This information will be made accessible and easy to find, in the form of open data.
  • To prevent improper and unwanted competition between authorities and private parties, the public interest provision in the Public Sector Market Operations Act will be tightened up.

This information is provided by:

Netherlands Enterprise Agency

Any further questions?

Netherlands Enterprise Agency +31 (0)88 602 44 44