On 2 February 2016, the Senate passed the Deregulation of Assessment of Independent Contractor Status Act (Wet Deregulering Beoordeling Arbeidsrelaties: ‘Wet DBA’). As a result hereof, as per 1 May 2016 the VAR will be abolished.
The VAR will definitively be replaced by a (voluntary) approval procedure. Companies can submit agreements to the tax authorities to obtain approval that the relationship between parties does not qualify as an employment relationship and consequently no wage tax withholding obligations and payment of social insurance contributions are required. Model agreement texts are being published on the website of the tax authorities to provide insight into the do’s and don’ts when hiring an independent contractor.
The period until 1 May 2017 will be considered an implementation period during which independent contractors and their principals will have the opportunity, if necessary, to adapt the contracts and working practice. During this period the Tax Authority will monitor developments, but will not enforce repressive measures, provided that parties actively reconsider the existing work relations.
Furthermore, the state secretary of Finance announced that the deemed employment relationship of supervisory board members for wage tax purposes will in the near future be abolished.
We will have to wait for further developments concerning (a.o.) the model agreement texts, the promised civil law evaluation of the model agreements and the position of supervisory board members.
For each separate work relationship it will however be necessary to determine whether or not a (deemed) employment exists. Therefore, when working with independent contractors, it is advisable to identify and list the independent contractors with whom your company is working and, if necessary, make the agreements with them in line with the new legislation.