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In the Netherlands, self-employed professionals and their contractors need to know how their business relationship will be assessed by the Dutch Tax and Customs Administration. Is there an employer-employee relationship or not? This is an important question with regard to tax liability. Employers only have to pay payroll taxes for their employees, but not for hired self-employed professional under certain conditions. Until 1 May 2016 a self-employed professional could provide their clients with a Declaration of Independent Contractor Status (Verklaring Arbeidsrelatie, VAR) as sufficient proof that there was no employment relationship.
2016 Employment Relationships (Deregulation) Act
Since 1 May 2016 the VAR has been replaced by model agreements, which have been introduced in the 2016 Employment Relationships (Deregulation) Act (Wet deregulering beoordeling arbeidsrelaties, DBA). As long as the business relationship between a contractor and a self-employed professional is based a such an agreement, contractors will be exempt from paying payroll taxes for this professional for this specific contract.
Types of model agreements
Self-employed professionals and their clients can choose to work according to 3 different kinds of standard model agreements. These have been drawn up by the Dutch Tax and Customs Administration:
- General model agreement: this model agreement covers most business relationships where employment is not involved.
- Sector or profession specific model agreement: meant for everyone working according to certain sectoral or professional standards or conditions.
- Individual model agreement: these is a specific model agreement that can be used by everyone working in the same sector or profession for which that model agreement was drawn up specifically.
If you do not want to use one of these model agreements, you and your client can always draw up one yourselves and have it assessed by the Dutch Tax and Customs Administration.
Model agreements are not mandatory
It is not mandatory for self-employed professionals and their clients to work according to a model agreement. If they do not, the client of a self-employed professional is obliged to assess whether or not an employment relationship exists and payroll taxes should be withhold.
No enforcement DBA until 1 July 2018
The Dutch Tax and Customs Administration has indicated postponing enforcement of the DBA Act until 1 July 2018. This means that if contractors and subcontractors fail to comply with this Act, they wil not be fined or taxed with retroactive effect.
The DBA hotline has closed.
When a self-employed professional and their client choose for the so-called opting-in scheme, the client is responsible for withholding and paying payroll tax and social insurance contributions for that specific contract. If so, they must notify the Dutch Tax and Customs Administration in a joint statement (Dutch) prior to the start of the actual work.