The Deregulation of Assessment of Employment Relationships Act (DBA Act) has, since 2016, replaced the previous VAR declaration. The DBA Act has not brought the intended clarity. It will not be fully enforced until 1 October 2021. Enforcement only takes place where the principal is acting in bad faith, or fails to follow guidance given by the Tax Authority.
Bad faith
A bad-faith principal is someone who deliberately creates or allows a situation of evident false self-employment to continue, while knowing, or being able to know, that an employment relationship in fact exists. This is the case where all three of the following apply:
- a (deemed) employment relationship;
- evident false self-employment;
- deliberate false self-employment.
Failing to follow guidance
An inspection may reveal that a (deemed) employment relationship exists, but without bad faith. In that case, the Tax Authority will not enforce, but will issue guidance instead. You must then act on this guidance to either:
- restructure the working relationship so that it genuinely falls outside employment, or
- report the relationship as employment in your tax return.
A period of three months generally applies to follow the Tax Authority’s guidance. If it later turns out the guidance was not followed and a (deemed) employment relationship still exists, the Tax Authority can enforce.
Web module
The web module is currently in its pilot phase. It is intended to give principals advance clarity on the classification of the working relationship. Participation in the pilot is anonymous and voluntary. During this pilot phase, the web module’s outcome is an indication, not a legal decision.
For the web module, click here (in Dutch).
Model agreements
The Tax Authority’s model contractor agreements will continue to apply in 2021 too. By working with an agreement drawn up (or reviewed) by the Tax Authority, a principal has certainty that it does not need to withhold and pay payroll taxes. The model agreements have been assessed by the Tax Authority for tax purposes and found acceptable.
For the model agreements, click here (in Dutch).
Questions about the above? Please contact one of Sørensen Advocaten’s employment lawyers. Call: +31 (0)10-2492444
