We have now published several articles on self-employed workers. Almost all of them were about the abolition of the VAR and the introduction of the DBA Act. The VAR (Declaration of Employment Relationship) is effective from 1 May 2016 abolished. The system under the DBA Act (Deregulation of the Assessment of Employment Relationships) came into force on that date, but the Tax and Customs Administration will not be enforcing it with penalties during its first full year.
The soap opera continues
We have often described the transition from VAR to DBA as a soap opera. Last Friday, State Secretary Wiebes of Finance added another episode to this soap opera.
In a letter to the House of Representatives setting out the Second DBA Progress Report The State Secretary states that the Tax and Customs Administration will not enforce the DBA, except in cases of fraud and blatant evasion, until 1 January 2018 (or for as long as necessary). This effectively takes the issue beyond the House of Representatives elections. It is left to the new Cabinet to deal with.
Recommendations
In the meantime, the State Secretary will set to work on the recommendations of the Committee for the Assessment of Model Agreements under the DBA Act. These recommendations focus on the further development of the system of model agreements.
The recommendation to postpone the enforcement of the DBA has already been discussed above. An explanatory note will be added to the general model agreements. In addition, a policy decision will be issued which should make it absolutely clear how the Tax and Customs Administration deals with the model agreements. Furthermore, additional tax assessments will only be imposed in cases of fraud or obvious non-compliance.
ZZP-er
The crux of the problem is that self-employed workers are increasingly facing the issue that clients do not wish to hire them as self-employed workers. Clients are, on a large scale, forcing self-employed workers to work for them as employees. This is the only way in which the risks perceived by the clients can be mitigated.
For many of the parties that had supported the State Secretary in implementing the DBA, this was the reason for withdrawing that support.
VAR back?
We had a system that worked satisfactorily to rule out the risks faced by clients: the VAR. Consequently, there is increasing talk in the corridors that the happy ending to this soap opera will be the reintroduction of the VAR.
But as befits a good soap opera, there’s a cliffhanger. We’ll have to wait in suspense for the new season, in which the new Cabinet can work towards a happy ending. The first bets on (the timing of) the reintroduction of the VAR have no doubt already been placed!
The VAR had one major drawback: it treated those deemed undesirable bogus self-employment under control. However, in our view, this should be possible to address through adequate monitoring by the Tax and Customs Administration, both at the time the VAR is issued and thereafter. This could perhaps be carried out by officials who have gained extensive experience in assessing the model agreements.