Are you already familiar with the three tracks that the government has devised to restore balance to the current labor market? What plans and proposals are there for the future of working as and with freelancers? Public Affairs Officer Sem Overduin and Business Development Director Paul Oldenburg gave all the ins & outs on this during a webinar. From the many questions asked during the session, it became clear how much the subject is of interest to self-employed people and clients. We share the most common ones below.
- How will the self-employment deduction continue to be phased out?
In the Coalition Agreement 2021-2025 it was agreed to accelerate the reduction of the self-employed deduction. This scheme will be reduced to €1,200 in 2026 and further reduced to €900 in 2027. The self-employed deduction for starters, the starter's deduction, will remain unchanged. However, self-employed people will be compensated during this cabinet period with an increase in the labor discount. With this measure, the cabinet wants to reduce the differences in tax treatment between employees and the self-employed. More information about the self-employed deduction and the steps that will be taken in the coming years can be found here.
- Why is the Fiscal Old Age Reserve (FOR) being abolished?
Since Jan. 1, 2023, you can no longer build up a retirement reserve. The government abolished it to prevent entrepreneurs from using the fiscal old-age reserve to obtain tax deferral. The old-age reserve built up until December 31, 2022, can still be settled according to the current rules. This means that it can remain on the company's balance sheet and can be used in the future to negotiate a qualifying annuity, or it must be settled no later than when the company ceases operations. Also with these measures, the government wants to ensure more equal taxation between employees, self-employed persons and shareholders.
- How is the element of "self-employment" further implemented?
Current case law looks at contraindications to the existence of an employment contract. Some of these are included in the Payroll Tax Handbook. Some examples are (1) the performance of work on the basis of a result obligation, (2) specific knowledge and expertise of the worker that employees within the organization do not have, and (3) that the worker receives substantially higher remuneration than employees doing similar work in salaried employment. In the coming period, it will be worked out with social partners, experts and stakeholders which facts and circumstances indicate self-employment and how these contraindications can be given weight in assessing the employment relationship.
- What is the current status of the enforcement moratorium?
In the period January through October 2022, 275 company visits and 200 book audits were conducted on the qualification of the employment relationship. Partly because of the limited quantitative capacity and the complexity of assessing the employment relationship, it is complicated for the Tax and Customs Administration to take effective action on false self-employment. On the other hand, additional staff have been trained and the Tax and Customs Administration currently has 80 FTE for enforcement.
- What plans does the Cabinet have for the enforcement moratorium?
In the Cabinet' s response to the reports issued by the Netherlands Court of Audit and the National Audit Authority, the Cabinet expressed its ambition to improve this enforcement in the short term and to lift the enforcement moratorium entirely by January 1, 2025 at the latest. In the run-up to January 1, 2025, the Tax and Customs Administration will devote extra attention to communication about enforcement. This will include the consequences for principals and contractors of the intended abolition and the (financial) risks they run.
- What if an audit reveals (fictitious) employment but no malice?
Then the Internal Revenue Service will issue directions that you can work on. Client and contractor are usually given three months to follow the directions. If this is not sufficiently followed, the Tax Office will impose correction obligations and additional tax assessments.