VAR to be replaced by agreements

The Declaration of Independent Contractor Status (Verklaring Arbeidsrelatie, or VAR) is about to be abolished. The Senate of Dutch Parliament has passed the Independent Contractor Status Assessment Deregulation Act (Wet deregulering beoordeling arbeidsrelaties), allowing the VAR to be replaced by agreements prepared or assessed by the Dutch tax authorities.

Abolishment of the VAR
We have informed you earlier about the abolishment of the VAR. The date of abolishment has now been postponed to 1 May 2016, the date on which the Independent Contractor Status Assessment Deregulation Act enters into effect. The main purpose of this act is to combat false claims of self-employment.

Agreements
The VAR is going to be replaced by agreements prepared or assessed by the Dutch tax authorities. In contrast with the VAR regime, which makes the contractor primarily responsible, in the new regime both the commissioning party and the contractor will be responsible for ensuring that the agreements are complied with.

For their agreement, the commissioning party and the contractor can use a pre-approved model. Said models are made available on the website of the Dutch tax authorities. By using that model, the commissioning party will have certainty regarding payroll tax obligations. Alternatively, the parties may submit their own agreement to the Dutch tax authorities for approval.

Transition
After the Independent Contractor Status Assessment Deregulation Act enters into effect there will be a transitional period until 1 May 2017, to allow the commissioning parties and independent contractors to adjust their procedures and agreements. During this transitional period the Dutch tax authorities will supervise but not enforce the new legislation, except in clear cases of fraud.

In the new system, the commissioning party will have more responsibility. Therefore we recommend seeking professional advice before entering into an agreement with a contractor. If you want to know more about the abolishment of the VAR and the new system and what consequences it will have for your practice, please do not hesitate to contact one of our employment or tax lawyers.