In our article “No VAR, no BGL – so what is it then?” We reported that the VAR (Declaration of Independent Contractor Status) is to be replaced by approved (model) agreements. At present, a VAR allows clients of self-employed individuals to protect themselves against the risk of back-dated payroll tax and social security contributions being levied. Naturally, this does require strict compliance with the (administrative) conditions attached to the use of a VAR.
The Tax and Customs Administration has now published a number of approved model agreements. You can find these approved models here. Around 60 to 70 models are due to be published here in the near future.
In our article “Will the VAR actually be replaced?” We have already reported on the many critical comments made by the Senate. That is where the bill for the Act Deregulation of the assessment of employment relationships, which would remove the VAR from the Wage Tax Act. The Senate remains highly critical even at this second stage, meaning it remains to be seen whether this bill will be passed. The debate and vote on the bill are currently scheduled for 27 October 2015. The intended date of entry into force of the bill is 1 January 2016.
Incidentally, unlike when a VAR is used correctly, clients cannot derive any indemnity from the use of an approved (model) agreement. Following the abolition of the VAR, the client and the self-employed person are jointly responsible for ensuring that their relationship is actually structured in accordance with the concluded (model) contract. If this is not the case and it is subsequently concluded that an employment relationship existed, additional income tax and social security contributions may be levied.
Addendum (19 October 2015)
In the Memorandum published on 19 October 2015 in response to the Report accompanying the Bill on the deregulation of the assessment of employment relationships (which abolishes the VAR) , State Secretary Wiebes proposes to the Senate that the plenary debate on the bill, scheduled for 27 October 2015, be postponed. He also proposes allowing a longer period for the transition from the VAR to approved (model) agreements. He is considering 1 April 2016 as the target date for the Bill to come into force and an implementation period until 1 January 2017. Until 1 January 2017, the Tax and Customs Administration will issue warnings only, but will not take any enforcement measures. Agreements submitted to the Tax and Customs Administration for approval before 1 February 2016 will have been assessed by 1 April 2016.