An application for a Declaration of Income Tax Status is reviewed by the tax authorities on the basis of the information submitted by the applicant. If, on the basis of the application form and possible additional information, the tax authorities feel that the (majority of) activities are performed in employment, a Declaration of Income Tax Status - wages will be issued. The tax authorities review, among other things, whether the applicant must follow instructions, if wages are being paid during vacation and sick time, and whether the applicant personally must perform the activities.
With respect to a sport coach/trainer with a sport federation, the tax inspector was of the opinion that the (majority of) the activities were performed in employment. The trainer/coach had filed an application for a Declaration of Income Tax Status with the tax inspector with respect to activities as sport (federation) coach and trainer. The submitted application noted that the activities had to be considered activities of the director and major shareholder at the company’s risk and expense. The tax inspector, however, was of the opinion that there was a relationship of authority between the trainer/coach and the sport federation, and consequently issued a Declaration of Income Tax Status – wages. On the basis of this Declaration of Income Tax Status – wages, the sport federation had to withhold wages taxes on the income of the trainer/coach.
The Court in Breda, however, ruled that there was no relationship of authority. There may have been some kind of authority, but this authority related to the realization of the goal of the sport federation to win as many prizes as possible at (inter)national competitions. The authority did not contain instructions on how the trainer/coach had to perform the activities. Also, the exhaustive list of general tasks and responsibilities of the trainer/coach could not be regarded as instructions on how to perform the activities. The trainer/coach, therefore, had to get a Declaration of Income Tax Status – income from activities at the company’s risk and expense.