Enforcement Dutch Employment Deregulation Assessment Act suspended until the 1st of January 2020
Last Friday, the Minister of Social Affairs and Employment and the State Secretary of Finance, announced in a letter (in Dutch) to the House of Representatives that the enforcement of the Dutch Employment Deregulation Assessment Act (Wet DBA) (the Act), which currently is suspended until the 1st of July 2018, will be suspended until at least the 1st of January 2020. This means there will be no inspection on pseudo self-employment of self-employed workers without employees and no penalties or additional tax assessments will be imposed. However, this non-enforcement policy does not apply to malicious parties, on the contrary. The Minister of Social Affairs and Employment wants to extend the possibilities for the enforcement of malicious parties as per the 1st of July 2018, namely those who have the intention to evade tax and/or to negatively affect the playing field.
At this moment, the enforcement of malicious parties only concentrates on the ‘most severe’ cases. These cases concern clients who knowingly and deliberately operate in a context of, amongst others, intent, fraud or scam. Soon there will also be enforcement of malicious parties who intentionally create or allow a continued existence of a situation of evident pseudo self-employment. In order to do so, the Dutch tax authorities have to prove the following three criteria through regular inspections of the income tax and national insurance contributions:
- there is a notional employment relationship;
- there is evident pseudo self-employment; and
- there is intentional pseudo self-employment.
The Act came into force in May 2016. With the arrival of this legislation, the Declaration of Independent Contractor Status (VAR-Verklaring) has lapsed and is replaced by model agreements. The purpose of the Act is to tackle pseudo self-employment by self-employed workers without employees. However, this act has led to uncertainty for self-employed workers without employees and their clients, because it is unclear which circumstance will or will not result in pseudo self-employment. Enforcement of the Act is therefore suspended while the government is working on new legislation, which will provide (more) clarity.
In this letter it is included that self-employed workers should get the space to run a business, while pseudo self-employment should be tackled. Considering the dissatisfaction regarding possible pseudo self-employment, mainly at the lower end of the labour market due to improper competition, the government considers the extension of the enforcement of malicious parties desirable.
In the letter to the House of Representatives, the Minister and the State Secretary indicate that the aim is to have the new legislation enter into force on the 1st of January 2020; an ambitious time-frame.