A natural person who is working in the Netherlands can do his job as a statutory employee or as an independent contractor. The independent contractors in the Netherlands are also known as freelancers or self-employed professionals (zzp'er).
Mostly upon request of their clients, freelancers or self-employed professionals (zzp'ers) can apply for a Declaration of Independent Contractor Status (VAR) to the Dutch Tax and Customs Administration.
The client is requesting this declaration because he wants to be sure of the tax and social solvability of his independent contractor. Dependent on the actual situation the client has the obligation to deduct Dutch income tax and social insurance contributions from the remuneration he has to pay to the contractor. By means of the VAR declaration the client has a clear view of these costs.
However some independent contractors possess a VAR declaration but are actually payroll employees. In order to avoid these sham situations the Dutch Tax and Customs Administration is going to replace the VAR declarations by general and individual model agreements, as well as model agreements per sector and profession.
Together with some external organizations the Dutch Tax and Customs Administration has drawn up some general model agreements. The independent contractor and his client can draw up an agreement themselves and are free to present this agreement to the Dutch Tax and Customs Administration. The advantage of having a general model agreement or proposed individual agreement is being certain not having to pay income tax and social insurance contributions.
The agreement will be valid for 5 years. Until January 1st 2017 the independent contractors and clients can adjust their settlements according to the agreements. In the meantime a transition period is in application.
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.