Bill zzp dossier: repeat of moves

At the beginning of October, outgoing Minister Van Gennip (Social Affairs and Employment) made public the bill "clarifying assessment of employment relationships and legal presumption. The legal presumption of employment under a rate of €32.24 is going to improve the position of vulnerable workers at the base of the labor market. A good proposal that specifically targets the group of working people who deserve more protection. But the proposal to replace the DBA law and the three proposed criteria are not going to provide the needed clarity. In fact, we are heading for the same impasse as in 2016 with the DBA law.

The minister proposes three criteria: 1) what is the work content management like, 2) is there organizational embedding, and 3) does the self-employed person work for his own account and risk. This is merely a ranking of existing case law. The criteria are not sufficiently clearly defined. And it is a missed opportunity that entrepreneurial criteria are not more firmly anchored in the new proposal, even though the House of Representatives has previously expressed a positive opinion on them.

The embedding criterion, which dictates that in principle a self-employed person cannot fill a position that a colleague in permanent employment also performs, is not going to provide the desired clarity. Or worse: many workers who consciously choose self-employment end up in an uncertain situation. The result: a repetition of moves, a gray area and a lot of ambiguity. And if clients, freelancers and intermediaries do not want anything in the current tight labor market, it is unrest.

By Natasja Spooren-Wassenaar

Budget Day 2023: what's in store?

Last Tuesday was the third Tuesday of September and that means Prince's Day! This year it was a Budget Day in special times. This is because the Rutte IV government is outgoing and for that reason is not allowed to announce grand plans and throw money around. Also, government finances are coming under increasing pressure and most political parties are already gearing up for the Lower House elections in November. In Hague terms: a "policy-poor" budget without too many major decisions. On this page an overview of the most relevant plans and measures.

1. SME profit exemption further reduced

The SME profit exemption will be reduced from 14% to 12.7% as of Jan. 1, 2024. The SME profit exemption is a scheme that reduces taxable profits after the entrepreneurial deduction. Entrepreneurs who make use of this scheme will thereby start paying taxes on a larger portion of their profit or income. Entrepreneurs with the highest profits lose the most financially.

2. Reduction in self-employment deduction continues

Since 2020, the self-employed deduction has been reduced in steps. In 2024, the deduction will be reduced by an amount of €1280. The self-employed deduction will then come to an amount of €3750. Until 2027, this reduction continues to an amount of €900. This fits into the broader policy of the government to create a more level playing field between employees and the self-employed.

3. Increase in untaxed travel reimbursement

The untaxed mileage allowance goes up from €0.21 to €0.23 in 2024. As an entrepreneur, you may deduct this amount from the profit for business trips with a private car, motorcycle or bicycle. As an employer, you may also give your staff a tax-free reimbursement of €0.23 per kilometer. This applies to commuting and other business travel by private vehicle.

4. Austerity of Energy Investment Deduction

If you invest in energy-saving measures and sustainable business assets, you may be eligible for the Energy Investment Allowance (EIA). A percentage of the costs of that investment can then be deducted from the profit. As a result, less tax is paid. The EIA for entrepreneurs will be extended until 2028. The percentage that may be deducted does drop from 45.5% to 40% in 2024. The investment is minimum €2500 and maximum €136 million. So it may be wise to make another large investment in 2023 to take advantage of the 45.5% rate.

5. Box 1 income from employment, benefits or home ownership

Your income in box 1 is taxed in two brackets. In 2024, you will pay 36.97% tax on your income up to 75,624 euros. That is 0.04 percentage points more than in 2023. On your income above 75,624 euros you will pay 49.5% income tax next year, the same as in 2023. The amount of the bracket limits went up other years by the rate of inflation. This year, the increase is 3.55%. That's less than the inflation rate of 9.9%. You're more likely to pay the higher rate of the second bracket because of this.

6. Box 2 stock ownership income

If you own 5% or more of the shares in a company, you have a "substantial interest. You may then receive profit distributions, also called dividends. In 2023, you paid 26.9% tax on this. In 2024, dividends received from substantial interest will be taxed in a two-tier system. On income up to 67,000 euros, you pay 24.5% tax. On everything above that, the rate is 31%.

In 2024, you pay less tax in Box 2 on profit distributions up to about €106,000. On higher profit distributions, you will pay more tax in 2024 than in 2023. So it may be interesting for you to distribute accumulated profits in the company still in 2023. It may be interesting for you to distribute accumulated profits in your company still in 2023. Consult with your advisor. Note: After a dividend distribution, you have money and investments in private. It is then capital in box 3. There is a tax-free capital of 57,000 euros in box 3. If the value exceeds this exemption, you pay tax on this in box 3.

7. Income-related health insurance law contribution

As an employer, you pay an employer healthcare insurance law levy on employees' wages. In 2024, this contribution is 6.57% over a maximum of €71,624. In 2023, the contribution was still 6.68% over a maximum of €65,952. This income-related healthcare insurance law contribution is part of the payroll tax.

On the entrepreneurial income, you pay the income-related health insurance law contribution yourself. For this, a rate of 5.32% on the maximum contribution income of €71,624 applies in 2024. The rate in 2023 was 5.43%. You will receive the (provisional) assessment for the income-related healthcare insurance act contribution at the same time as the (provisional) tax assessment.

8. Further develop legislation and strengthen enforcement

Officials at the Ministry of Social Affairs and Employment continue to work on the bill to have a clearer distinction between self-employed workers and employees. This bill covers the criteria of "authority," "embedding," and "self-employment. It is expected that within now and a few weeks the draft bill will be published through an Internet consultation. The Tax Administration will also continue to work towards lifting the enforcement moratorium in order to improve the enforcement on false self-employment.

Finally, work continues on the legal presumption of employment below a certain hourly rate (between €30 and €35 per hour). Should a worker earn less than this hourly rate, there is a legal presumption of employment. It is then up to the worker to prove that this is not the case.

by Youri Snip

IRS puts an end to 'free substitution' model agreement

Earlier this week, the Internal Revenue Service shared the notice that the approval of model agreements based on free substitution will be withdrawn as of Jan. 1, 2024. This decision is in response to their interpretation of the Supreme Court's ruling in the Deliveroo case. The Supreme Court ruled that only 'free substitution' can constitute employment. Clients and contractors should reassess the employment relationship before then if model agreements based on free substitution are used.

There are different types of model agreements that have been approved by the tax authorities in recent years. The use of an (approved) model agreement is not mandatory, it gives parties a certain degree of certainty that - if parties also behave in accordance with what is agreed in the model agreement - there is no question of false self-employment.

The Inland Revenue's decision does not affect working on an assignment through any of HeadFirst Group's labels. We use approved model agreements based on intervention. The criterion 'free substitution' is part of this model agreement, but not leading.

By Natasja Spooren-Wassenaar

Opinion piece: The zzp spirit is out of the bottle - let workers choose their own form of contract

Recently, labor market data specialist Intelligence Group released figures showing that the majority of self-employed people would like to stay in business. Never before have so few self-employed people wanted to return to paid employment, just ten percent. In 2015, the figure was 18 percent. The same declining trend can be seen in all education levels. Of forced self-employment, I dare say on the basis of this information, there is hardly any more.

Studies by Statistics Netherlands and data from the Self-Employed Labor Survey also show the same picture over and over again: self-employed workers - compared to employed or temporary workers - are more often satisfied with their working conditions, sense of autonomy and learning opportunities at work. Self-employed workers experience less stress, are generally more proud of the work they do, and place great value on their sense of flexibility and freedom. Positive numbers and a development that I think we should cherish.

Not for nothing has the number of self-employed people been rising rapidly for years. In the Netherlands there are already over 1.2 million of them. Worldwide, with 1.57 billion, it is now the fastest growing group of workers in the labor market.

Why, according to the minister, is the permanent contract the norm?
Despite these clear figures, Minister Van Gennip (SZW) came out with a firm letter on December 16, 2022. A letter full of plans and proposals that tighten the thumbscrews, make being self-employed more unattractive and where working as an employee is clearly taken as the starting point. In these plans, both labor law and tax law tighten the belt for the self-employed.

The permanent contract is the norm and the minister wants to see a reduction in the number of self-employed workers in the Dutch labor market. This seems at odds with the choices made by working people in the Netherlands. Want to limit the group of working people who, on average, are the happiest? Especially since it is very questionable whether they will actually return to salaried employment if the rules become stricter and the frameworks more limited.

Everyone is desperately needed
All the plans and proposals highlighted in last December's letter and the broader labor market letter of April 3 clearly aim to reduce flexible work. Van Gennip also makes this clear in speeches and television appearances. The plans are based on the opinions of the Borstlap Commission and the SER MLT opinion, but we are far too quick to overlook the fact that these reports came about in a truly completely different time. Reality has caught up with us: after all, we are currently facing an extremely tight labor market. Employers and clients are crying out for staff, vacancies are being filled less quickly, and many organizations currently see this as the greatest challenge and threat to the continuity of their services. Shouldn't the focus of policy and political debate be on getting more workers on the job market instead of reducing flexible work? Shouldn't we give more space and flexibility to workers? And embrace all workers, whether they are self-employed, employees or temporary workers?

Criterion of 'embedding' becomes a battleground
When I then zoom in on the content of the self-employment plans, I am nonetheless moderately enthusiastic. In the corridors I hear that policymakers and organizations involved are struggling to flesh out the three elements of authority, embedding and self-employment. Will the criterion of "embeddedness in the organization" provide the desired clarity? We are already struggling incredibly to clarify the term "authority. Will the embedding criterion then provide clarity, or will it just create even more ambiguity? While clients, intermediaries and freelancers have been calling for clear frameworks and rules for years.

As CEO of one of the largest HR-tech service providers in the country, I see hiring requests coming in daily from numerous organizations. Think of ministries, municipalities, companies and universities. And time after time I ask myself; is this function or assignment embedded in the organization? By the current definition of embedding, the answer is often 'yes': these are professionals who are flown in to work on a project or replace someone temporarily. More and more organizations are doing a lot of project-based work. Hired professionals - take software developers as an example - work shoulder-to-shoulder in teams with employees on the same projects. Over time - currently averaging 1 year - the professional moves out and the professional has made a valuable contribution to the client's goals with his or her knowledge and expertise. The hiring organization happy and the professional happy. And time and again I ask myself; will this still be possible in the future?

If not, this is going to have serious consequences for the stability of organizations. The very tight labor market and already sometimes faltering services are going to be in even bigger trouble. I predict you: this is going to be as much of a battleground as it was in 2016 when the DBA law was introduced.

Regardless of how you will define embedding, the resulting question is: what will be the interrelationship between the three elements of authority, embedding and self-employment? How much weight will the entrepreneurial criteria be given? Will these criteria actually be seen as contraindicating the existence of an employment contract? And do we then look at embeddedness of the work being performed? Or do we look at embeddedness of the worker?

The House of Representatives was therefore right to ask critical questions on February 9 in response to the zzp plans. On Wednesday, May 31, the House received no less than 56 pages of answers from the minister. In my opinion, the minister has not yet sufficiently answered those questions. The ball is now in the Parliamentarians' court to ask about this again during the Commission meeting on June 7.

What then?
I am positive that entrepreneurial criteria are clearly named in the mid-December letter. Therefore, start working on the further elaboration of clear and verifiable entrepreneurial criteria. And, more or less in line with the advice of the Boot Committee, bring forward the entrepreneurial criteria. Formulate firm criteria that an independent entrepreneur must meet. If the worker jumps through this hoop, he or she is obviously self-employed and then notions such as embedding and authority are no longer relevant. This also improves enforceability because the number of situations to be checked is thus much reduced.

What I have been advocating for some time is that we take a more sectoral approach to the zzp issue. The target group is simply far too heterogeneous and diverse for generic measures to combat the excesses. The majority of the self-employed, as mentioned, have consciously chosen self-employment and are satisfied with their working conditions and sense of autonomy. We should cherish that and not frustrate it with generic measures. Follow the example of the healthcare sector and, on the contrary, enter into discussions with trade associations and market parties in sectors that involve a lot of public money, such as education and childcare. Make clear agreements with each other about when it is or is not possible to work as a self-employed person. That approach is much more in line with the diversity of the target group and in this way you ensure customization at the sectoral level.

And third, get to work as soon as possible on a basic disability system for all working people. Separate it from the form of contract and get everyone to contribute to a collective system. That is solidary, keeps the system affordable and ensures that we protect all vulnerable workers from the consequences and risks of disability. This will require a major system change and the necessary thinking, but it is more than necessary that we start this as soon as possible.

The genie is out of the bottle
The zzp spirit is out of the bottle. I do not believe that top-down measures from The Hague are going to change this. The number of self-employed people will continue to increase. This movement is irreversible. That is why I ask politicians and policy makers in The Hague to embrace this development and, on the contrary, to regulate matters around it properly. Focus less on the form of contract, ensure that everyone contributes to a collective system and offer more space and freedom to workers, especially now, in times of extreme scarcity. On Wednesday, June 7, people will cross swords in the Chamber. I am curious to see if these fundamental questions will be raised and hope for a good substantive debate. See you then!

Note to editors

Do you have any questions or comments? Please contact Maud Raaphorst, Teamlead Communications at HeadFirst Group, reachable at 06 - 51 10 70 77 or maud.raaphorst@headfirst.nl

by Youri Snip