Sixth progress letter on topic of sole tradership

The distinction between sole tradership and working as an employee has particular relevance in terms of the docking of withholding taxes and of employee insurance, both of which are mandatory, in addition to which the dissimilarity between a “regular” employment contract and an alternative work relationship impacts on the rights of sole traders versus employees and the protection each of these categories of workers enjoy, as well as on the risks and costs for the principals or employers, as appropriate.

The Social Affairs and Employment Minister and the Junior Finance Minister in their sixth progress letter to the Lower House of the Dutch Parliament are outlining the state of play where it concerns the various measures governing sole tradership. The pilot of the web module, which has been designed to pinpoint the precise nature of work relationships, is scheduled to be launched on 11 January 2021. It will be up and running for at least six months. Evaluation of the pilot is expected to follow in the summer, enabling decisions to be made regarding the follow-up on the web module and the timing (from the first of October 2021 at the earliest) of the phase-in of anti-BSE (bogus self-employment) enforcement measures. Both the Tax and Customs Administration and the Social Affairs and Employment Inspectorate will be in monitoring mode throughout the entire period, albeit that the tax authorities will not (yet) be able to impose adjustments and/or levy penalties unless the offending party has been found to have been acting in bad faith or has failed within a reasonable term to comply with the instructions it had been given by the authorities.

The object of the web module pilot consists in finding out whether this approach would enable clarification of the nature of, and help principals shape, work relationships. The web module has been designed at the pilot stage to indicate under which of the following three categories a particular work relationship should be classified:

• statement by principal: this will enable the assignment in question to be performed under a non-employment format (e.g. by a sole trader);
• suggestion of employment relationship: there are strong indications that the work relationship in question qualifies as a BSE arrangement;
• inconclusive: the answers to the questions have failed to clarify whether the work relationship in question should be filed under the sole tradership category or the category of “regular” employment.

Dutch version: Zesde voortgangsbrief “Werken als zelfstandige”