'Wet DBA' Model agreements with tax and custom administration no longer valid
The model contracts approved by the tax authorities that allow independent contractors to contract with clients without being a taxable employment relationship will lose their validity this year. The Social and Economic Council (SER) has further issued advice to reduce tax facilities for the self-employed entrepreneurs in order to discourage self-employment.
This article has been updated on 23 June 2021
The model agreements approved by the Revenue Service that allow independent contractors to contract with clients without being a taxable employment relationship will lose their validity this year. The Revenue Service is gradually publishing updated model agreements. The Social and Economic Council (SER) has further issued advice to reduce tax facilities for the self-employed entrepreneurs.
In the recent weeks the discussion in the media about the position of self-employed persons flared up again.
In the SER (Social Economic Council) advisory report that appeared this week, self-employed workers below an hourly rate of € 30-35. The self-employed a legal presumption of employment will arise when hiring deduction for IB entrepreneurs (sole proprietorship) should lapse in the SER proposals. This seems to lead to the necessary concern among self-employed persons and their clients. Another important point that contributes to this commotion is that also the model agreements approved by the tax authorities will gradually lose their validity this year without a clear solution at hand.
The implementation of the SER advice is still in the future, with many aspects to be worked out in more detail. The expiration of the model agreements, on the other hand, is concrete and topical. We therefore consider some clarification regarding this last point to be appropriate.
With the introduction of the Assessment of Employment Relationships (Deregulation) Act ('Wet DBA') in May 2016, the tax legislation concerning the hiring of self-employed persons has been tightened. If an employment relationship can be equated with a (fictitious) employment relationship, the client/employer must withhold and pay payroll taxes, consisting of wage tax and social security contributions. In order to offer a solution to the uncertainty of clients and contractors that arose with the introduction of the 'Wet DBA', the Revenue Service has approved various model agreements at the request of industry associations and individual companies and published them on their website. Approved model agreements are published by the Revenue Service stating the approval number and expiry date in the DBA agreements register.
If a principal and a self-employed person use a model agreement - and act in accordance with the model agreement - the principal is, in principle, not required to withhold and remit payroll taxes. However, the model agreements approved by the Revenue Service as of 2016 have a validity period of five years. Various model agreements will therefore expire in 2021 and onward. As of their expiration date, the model agreements in question no longer provide protection . There is no automatic extension of the model agreements. Meanwhile, a number of branch organizations, but also a number of individual companies have extended the term of their model agreements. The updated general model agreements "no employer authority" and "free replacement" have been made available on the website of the Revenue Service recently.
Most model agreements stated that the parties (the self-employed person and the client) do not intend to enter into an employment contract. The Dutch Supreme Court recently ruled that the intention of the parties no longer plays a role in determining whether the agreement must be regarded as an employment contract (6 November 2020 ECLI:NL:HR:2020:1746). In that light we note that the provision stating that parties do not have the intention to conclude an employment agreement, has been removed from the updated general model agreements as published by the Revenue Service.
The enforcement moratorium applies until 1 October 2021. This means that the Revenue Service will not impose any retrospective payroll tax and/or adjustment obligation if they are of the opinion that an employment relationship qualifies as (fictitious) employment, unless the taxpayer has malicious intent or fails to follow instructions from the Revenue Service (in a timely manner). Because the duration of the enforcement moratorium seems to be linked to the entry into force of the new laws and regulations replacing the 'Wet DBA', we expect a new extension of the enforcement moratorium.
In the meantime, we advise you to submit the model agreement you are using, insofar as its validity will soon expire or has expired, to the Revenue Service, and/or to make use of the updated general model agreements "no employer authority" and "free replacement" for hiring new independent contractors. It should be noted that the explanatory notes to the model agreements are very generic and do not provide for much guidance on the scope within which they can be used. That does not mean that parties are always free to choose if a person works as an independent contractor or as an employee. The scope of the applicability of the model agreements is restricted by the general comments in the explanatory notes. Therefore, the applicability should be considered on a case by case basis.
Should you have any questions on this subject, please contact us or your regular contact.