What exactly is the DBA law?
De wet DBA (Law on Deregulation of Employment Relationships) was introduced in 2016 to counter bogus self-employment in the labour market. The Tax Authority wants to prevent bogus self-employment because it constitutes an infringement on the social system and the treasury. Before 2016 self-employed persons (zzp'ers) used a Statement of Employment Relationship (VAR) to demonstrate their independence with respect to the client. The Tax Authority then indemnified clients against fines or the subsequent imposition of payroll taxes. The cabinet believed that companies were abusing self-employed persons (zzp'ers). Some employers chose not to hire the 'normal employee', because for less time and money, but with tax advantages, they could put a zzp'er to work. The DBA law replaces the VAR. Under the DBA law both the client and the contractor are responsible for making agreements about the employment relationship. Parties can make use of
model agreements
– with contractual terms so that there is no employment relationship – that have been approved by the Tax Authorities.
The DBA law in practice
In practice, the DBA law – still – causes a lot of discussion and resistance. The model agreements of the Tax Authorities are, practically speaking, unworkable, because the legal equality is not guaranteed. That causes lack of clarity and uncertainty for both freelancers and clients. They therefore have to check extra carefully whether the agreement complies with the law, which leads to unease about their tax position.
Pilot web module
Because of the law DBA which drew a lot of criticism, the pilot web module started in January 2021. The web module is nothing more than a questionnaire whereby client and contractor can check whether their working relationship is a contract for services or an employment relationship. Yet there is little confidence in the web module. This is partly due to the 'enforcement moratorium' of the Tax Authority. The Tax Authority only imposes corrections if self-employed persons or clients are 'acting in bad faith', in other words deliberately giving the appearance of self-employment. After evaluation of the pilot all parties – the Tax Authority, clients and contractors – indicate that the tool provides no certainty. "The web module is not a 'miracle cure' and in many cases it does not provide clarity about the employment relationship. All parties want change in the market.
The future of the DBA law
The DBA law is subject to change. From research by the General Court of Audit it follows that self-employed persons (zzp’ers) who should actually be regarded as employees and pay less tax are not quickly caught by the Tax Administration. For the investigation 1.1 million tax returns of self-employed persons were checked to find out how often the Tax Administration checks a return. Since 2016 — the year the DBA law was introduced — the number of corrections has declined. Tax officials only check a handful of clients to see whether they are wrongly not remitting wage tax; self-employed persons are also checked less. Between late 2019 and 2021 the Tax Administration issued only three notices and imposed a correction once.
The Court of Audit concludes that the web module yields little, while the cabinet expects a lot from it. “Because of the very restrained enforcement by the Tax Administration” sham self-employment has not decreased, while this causes 'an unequal playing field in the labor market'. The cabinet indicates that the current version of the web module will remain in place for the time being. In April 2022 the responsible State Secretary Marnix van Rij (Fiscality and Tax Administration) stated that it is a complex matter, and that the cabinet the approach to false self-employment wil wants to include as part of the reform of the labour market that must be initiated during this cabinet period.
