ZZP-er means Zself-employed Zunder Pstaff. A tax scheme that has now been adopted by more than a million people. Often because the tax burden is significantly lower when income is treated as a profit than when it is taxed as wages.
History
First, a brief history. On 1 May 2016, the VAR (Vstatement AlabourR(relationship) was abolished. Through the VAR, the Tax and Customs Administration provided the self-employed person’s client with the assurance that, for the purposes of paying income tax and social security contributions, no employment relationship existed.
The VAR was abolished because it was being abused. There were many so-called ‘bogus self-employed’ workers; people who presented themselves as self-employed but who worked under conditions comparable to those of an employment relationship. And the VAR was used to cut labour costs by forcing employees to carry out their work as self-employed workers at lower rates.
DBA
The DBA Act replaces the VAR. DBA means Dregulation Bassessment AEmployment relationships. A system of (model) agreements approved by the Tax and Customs Administration was intended to ensure that, on the one hand, genuine self-employed workers were not discouraged and, on the other hand, abuse could be combated.
Of course, a system like this cannot be introduced overnight. During the one-year transitional period, the Tax and Customs Administration only enforced the DBA in clear-cut cases of abuse. It soon became apparent, however, that the DBA was not going to work either. The transitional period was therefore extended on a few occasions and is now set to continue until the Rutte III Government has finalised a replacement for the DBA.
Coalition agreement
The issue surrounding self-employed workers was a key topic during the negotiations that led to the formation of the Rutte III Cabinet. In the Coalition agreement According to this Cabinet, the intention is to introduce three categories of self-employed workers:
- low rate
- high rate
- other
The term ‘low rate’ refers to an hourly rate between €15 and €18 (This is for guidance only). If these self-employed workers have entered into a long-term contract (three months or more) or are carrying out regular business activities, they are employed by the client.
The ‘high rate’ refers to an hourly rate of €75 or more (also an indication). These self-employed individuals may choose to be classified as self-employed. In that case, they must enter into a short-term contract (less than one year) or not carry out the company’s regular business activities.
For the remaining self-employed workers – estimated to number around 800,000 – the client can obtain an exemption from the obligation to deduct payroll taxes and employee insurance contributions by completing an online form. This is also referred to as the “client’s declaration”. The form must, of course, be completed truthfully.
Self-employed individuals cannot derive any immunity from liability from the results of the online module. The Tax and Customs Administration assesses, on the basis of the self-employed individual’s income tax return, whether the income is to be taxed as business profits or as income from other activities.
Clarity
Clarity will only be achieved once the Cabinet has fleshed out the plans set out in the Coalition Agreement. Minister Koolmees of Social Affairs has made a start by consulting with a large number of “stakeholders” on the issue. As might be expected, these parties see the client’s declaration as a particular problem. The Minister acknowledges that the implementation of this declaration will be a thorny issue. However, his enquiry into alternatives has not yet yielded any concrete answers. Perhaps the solution lies in a fundamental modernisation of employment law.
It is likely that a great deal of water will flow under the bridge before the Ministry of Social Affairs (together with the Ministry of Finance) comes up with a solution to this tricky issue. Until then, we remain in the transition period to the DBA, during which the Tax and Customs Administration will only intervene in cases of obvious abuse.