The abbreviation DBA means Dregulation Bassessment Alabour relations and is the name of the Act that brought about the abolition of the VAR (Vstatement AlabourR(relation).
DBA was born
A short Royal Decree, published in the Government Gazette on 28 April 2016, has definitively set the date of entry into force of the DBA Act as 1 May 2016 has been finalised. We can therefore report that the DBA was officially introduced yesterday. The fact that not everyone is entirely happy with the new law is evident from the large number of parliamentary questions that have been asked and answered on the subject. In all these responses, government ministers – in most cases State Secretary for Finance Wiebes – stubbornly maintain that, in reality, little has changed. In fact, they claim that the introduction of the DBA Act will actually improve the situation.
Incidentally, the law will come into force on 1 May 2016, but with a grace period. It will only take effect from 1 May 2017 The Tax and Customs Administration will actively enforce the new rules. Anyone who doesn’t go too far before 1 May 2017 should therefore not run into any problems.
No pointless nit-picking
We have already written about the introduction of the DBA Act on a number of occasions, most recently in the article The final chapter of the VAR. Please refer to these articles for the content of the new regulations. A number of passages from the latest Wiebes’ replies We do not wish to withhold the answers to the questions put by MP Omtzigt (CDA).
When asked exactly how parties are required to comply with the (model) contracts, Wiebes replies that a minor, occasional deviation does not automatically preclude the certainty derived from the Tax and Customs Administration’s approval. This concerns deviations from the tax-relevant provisions marked in yellow in the model contracts. Deviations from other provisions are permitted without further ado. Wiebes gives an example (which, in our view, is very obvious): “For example, a minor, one-off deviation occurs if the contractor leaves a tool at home and uses one of the client’s tools that day.”. He goes on to say: “Just as in other areas of taxation, the Tax and Customs Administration assesses the situation on the basis of reasonableness and without needless nit-picking.”. We are curious to see how the tax court will take this into account in its assessments.
Supervision
Wiebes makes no comments on the (specific) details of how the Tax and Customs Administration will monitor compliance with the DBA Act. He merely points to the various inspection options available to the Tax and Customs Administration, such as on-site inspections. Here too, he writes: “If the situation found is reasonably consistent with the model agreement used, the Tax and Customs Administration will conclude its investigation.”. Wiebes also emphasises that assessing employment relationships has been part of the Tax and Customs Administration’s remit for decades.
Instructions
Factors that may indicate the existence of an employment relationship must be assessed in the context of their interrelationship. Wiebes provides guidance on a number of these factors:
- Participation in the client’s pension scheme and occupational accident insurance are factors that strongly suggest an employment relationship;
- Providing or reimbursing the cost of training or a course is a strong indication of an employment relationship;
- Attendance at meetings at the client’s premises may indicate that the self-employed person is, in fact, working within the organisational framework of the client’s business;
- The provision of workwear by the client may be an indication of the existence of an employment relationship;
- The provision of safety equipment by the client need not be taken as an indication of the existence of an employment relationship;
- The provision of an office workstation by the client will usually no may indicate the existence of an employment relationship.
Risks
The focus of the debate surrounding the introduction of the DBA Act now appears to be on self-employed workers without employees. Wiebes emphasises that the position of self-employed workers without employees will not deteriorate. In fact, according to Wiebes, self-employed workers without employees face less risk when working under a model contract than when working under a VAR.
That may well be the case, but the risks for businesses that employ self-employed contractors are certainly set to increase significantly. Time will tell how the Tax and Customs Administration will actually enforce the DBA Act in practice and to what extent it will genuinely refrain from nit-picking.
Business owners would be well advised to (re)assess the risks associated with hiring staff within their business and, in doing so, weigh up the option of hiring self-employed workers against the alternatives. Naturally, the advisers at VWGNijhof are happy to assist with this. The one-year trial period can be very useful in this regard.