Court of Appeal of Den Bosch recently ruled that carpenters who install garden sheds do not qualify as employees, but as self-employed workers. The proverbial dime might as well have fallen the other way.
The judgment is particularly interesting in that the court classifies the relevant facts and circumstances.
What are the facts?
The case concerns a BV whose activities consist of woodworking, including the production of composite wooden structures, such as garden sheds and canopies. To install these garden sheds and canopies, the BV hires four carpenters from abroad. These carpenters are registered with the Chamber of Commerce in their country of origin and have a VAT number from that country.
As part of an audit of the BV's books, the Inland Revenue alleges that the carpenters worked as employees at the BV. For the years 2013 to 2017, over €300,000 in payroll tax is retrospectively levied from the BV (plus over €40,000 in tax interest and penalties of over €30,000).
Pros and cons
After considering, in line with established case law, that the tax authorities have the burden of proof that there is an employment relationship between the carpenters and their client, the Court ranks the facts found by the tax authorities into circumstances that point to an employment relationship (employment contract) and circumstances that point to self-employment. In particular, this concerns the answer to the question whether the carpenters work in a relationship of authority to the BV.
Circumstances indicating a employment:
- the BV ensures that the carpenters can constantly stay at work;
- they are told by phone/text message which address they have to work at;
- materials, construction drawings and fixing materials (and a crane if necessary) will be prepared for them by the BV;
- the carpenters assemble according to the supplied construction drawing and can contact the BV in case of emergencies;
- van and carpenters' clothing have no mention of their company's name;
- the BV handles communication with the customer (about the offer, delivery and so on);
- the BV is ultimately responsible for the work and receives any complaints.
Circumstances indicating independence:
- the carpenters are paid per garden shed or canopy installed;
- they go to the works with their own transport, wear their own company and safety clothing and use their own (hand) tools;
- the carpenters do not present themselves to the customer as employees of the BV;
- the BV takes into account in its planning the periods when the carpenters indicate they do not want to work;
- the carpenters do not attend company outings, do not attend company training courses and no job performance reviews are held with them;
- in case of illness, leave of absence or incapacity, the BV does not pay the remuneration;
- when the BV receives complaints, the carpenters have to go back to the customer to solve the problems.
All things considered, the court held that the circumstances indicating self-employment outweighed the circumstances indicating employment. The additional tax assessments for payroll tax are therefore dismissed.