We are almost halfway through the implementation period since the Declaration of Independent Contractor Status (‘VAR’) was abolished. Service agreements must be checked in view of the new situation, also if you entered into a contract with the limited liability company of the independent contractor.

For each separate work relationship, you must check whether or not a (deemed) employment contract exists. The key word is 'authority': if, by working under your authority, you have a wage tax withholding obligation in most cases for the independent contractor and you have to pay social security contributions. Contracting an independent contractor through their own (management) limited liability company (e.g. a B.V.) is not a guaranteed safeguard against these obligations, depending on the circumstances. The fact that the VAR has been abolished requires a case-by-case evaluation of your service agreements.

The period until 1 May 2017 is regarded as an implementation period, during which principals and their independent contractors will have the opportunity to adapt the contracts and working practice. During the implementation period, the Tax Authority will monitor developments, but will not enforce repressive measures, provided that the parties involved actively reconsider the existing working relationships.