Replacement of DBA Act: progress report

The Dutch Minister of Social Affairs and Employment has brought the Lower House up to speed on the progress made involving the replacement DBA legislation (“DBA” being the Dutch acronym for the Labour Relations Assessment (Deregulation) Act of the Netherlands). Last year’s coalition agreement contained announcements of measures aimed at combating phantom self-employment and competition on employment terms and at corroborating the lack of employment association between sole traders on the one hand and the latter’s principals of the other. The measures in question cover the following aspects:

• Principal’s statement
  A web module is to be developed – and is expected to come on stream by late 2019 – enabling principals to obtain a “principal’s statement” confirming that no employment association is being entertained with (a) particular sole trader(s). The Minister is to provide the House with a further progress report before the summer (recess) of 2019.
• Clarification of (relationship of) authority
  Greater clarity is to be provided as to when exactly a principal and the latter’s contractor can be said to entertain a relationship of authority between them, so as to enable them to decide for themselves whether they do or do not entertain an employment association. The clarification of the authority criterion is to take effect on the first of January 2019, by including extensive explanatory notes as an appendix to the Payroll Tax Manual.
• “ALT” (cheap-rate employment contract)
  It should no longer be possible for business owners to deploy cheap-rate sole traders for extended periods of time as participants in what are regular business operations. As this measure may well be confirmed as flying in the face of EU regulations, the search for alternatives is already on. This measure is not expected to take effect before the first of January 2021.
• Opt-out
  The opt-out measure is aimed at creating scope for waiving payroll tax deduction, as extra assurance for sole traders and principals alike. Both the ALT and opt-out measures are currently being worked up, for joint legislative inclusion.

The Tax and Customs Administration has suspended enforcement of the DBA Act to the first of January 2020 at the earliest (except in scenarios involving bad faith action). The use and role of fictitious service contracts (whose object it is to protect vulnerable groups of participants in the labour market)  is being revised in connection with the introduction of additional protection for those sole traders who operate at the bottom end of the labour market. The Cabinet is to enter into consultation on the matter with the various employers’ and employees’ organisations.

Dutch version: Voortgang vervanging Wet DBA