The Senate voted last Tuesday to abolish the Declaration of Employment Relationship (VAR) as of May 1, 2016. On that date, the Deregulation Assessment of Employment Relationships Act (DBA) will come into effect, replacing the VAR with model agreements that are intended to provide freelancers and businesses with more clarity and certainty.
At this moment, self-employed individuals with a VAR can demonstrate to a client that they are hiring an independent contractor and therefore do not need to pay wage tax and premiums. By asking self-employed individuals to provide a VAR, clients can protect themselves from wage tax and premiums. In practice, however, it happens that self-employed individuals do have a VAR but are actually just employees in practice (‘pseudo self-employed’).
With the introduction of the Model Agreements, clients and self-employed persons who want certainty about the obligation to pay wage tax and premiums can have (sector) specific contracts reviewed by the Tax Authorities. They assess who is responsible for paying wage taxes.
