New rules for independent contractors
As announced, with effect from 1 May 2016, a new
set of laws applies to the relationship between companies and independent contractors.
The new rules read that the so-called ‘Declaration of Independent Contractor Status’ (VAR-verklaring) cannot be further relied on by contractors. As of 1 May 2016, contractors and companies can rely on either sample contracts (‘modelovereenkomsten’), issued by the Tax Authority (Belastingdienst), or rely on tailor-made contracts. Parties using tailor-made contracts can request the Tax Authority to render prior approval. Parties using sample contracts or contracts that are approved by the Tax Authority run a low risk of having to pay income tax and social security contributions, provided that they fully comply with the terms and conditions of such contracts. If parties fail to comply, the Tax Authority may still regard the relationship as an employment relationship, causing payment of taxes and potential additional penalties.
As the new situation causes uncertainty, the Tax Authority elected to thoroughly assess the new laws. In addition, the Parliament has brought this uncertainty to the attention of the Secretary of State for Finance, Mr. Wiebes. In a letter of Mr. Wiebes to the Parliament of 1 July 2016 on this subject, he mentions that parties often elect to submit tailor-made contracts to the Tax Authority. Over 3500 tailor-made contacts have been submitted since late 2015. Up till now, 2400 contracts have been reviewed, of which 800 have been withdrawn by parties during the review, 750 have been denied by the Tax Authority, (only) 200 have been approved by the Tax Authority, and 650 are still in the process of being reviewed by the Tax Authority.
The letter also reads that the Tax Authority is not capable to review tailor-made contracts in due course. It can even take up to 6 months to finish any review. To speed up this process, a special task-force has been established which aims to finish any review within 8 weeks.
Mr. Wiebes announced that he will further update the Parliament on the current status of affairs early September 2016.
In any event, it is strongly recommended to use sound contracts, contracts that are in conformity with the applicable rules. Although sample contracts are available, such contacts are often not suitable for governing the commercial and professional interests of parties.
Source: o.a. Kamerbrief van staatssecretaris Wiebes