What is the DBA Act and why is it important for self-employed workers?
The Wet DBA (Deregulering Beoordeling Arbeidsrelaties) was created to create clarity in the working relationships between self-employed persons (zelfstandigen zonder personeel) and their clients. The goal is to prevent false self-employment, where a self-employed person actually functions as an employee without the corresponding rights and obligations. This is important because it helps create a level playing field for all workers, both salaried and self-employed.
For zzp’ers, the DBA Act means that they must carefully manage their employment relationships to ensure that they are truly operating as entrepreneurs. For principals, it means that they must guard against the risk of hiring bogus self-employed workers, which can lead to fines and additional taxes. The law is therefore relevant for both parties to mitigate their legal and financial risks.
How does the DBA Act differ from the VAR arrangement?
The VAR (Declaration of Employment Relationship) regulation was the predecessor to the DBA Act and offered self-employed persons and their clients greater certainty about the tax status of their employment relationship. With the VAR, self-employed workers could prove that they were regarded as entrepreneurs by the tax authorities, which safeguarded clients from paying payroll taxes.
The DBA Act replaced the VAR regulation because the declaration was being abused too much. Under the DBA Act, the responsibility for the correct qualification of the employment relationship lies with both the zzpp’er and the client. This means that both parties bear more responsibility for ensuring that the relationship is not seen as a disguised employment relationship. The change was necessary to maintain the flexibility of the labor market while preventing abuse.
How does the DBA Act affect clients?
For clients, the DBA Act entails a number of responsibilities. They must ensure that the employment relationship with a zzp’er is not regarded as false self-employment. This means that clients must properly document the employment relationship and be able to prove that the self-employed person is actually self-employed.
The risks for principals are significant. If the Inland Revenue rules that an employment relationship exists, this can lead to additional taxes and fines. It is therefore important that clients make clear agreements and record them in a model agreement so that there are no misunderstandings about the nature of the collaboration.
How can a model agreement provide certainty?
A model agreement is an agreement approved in advance by the Tax Office that clients and self-employed workers can use to record their employment relationship. By using a model agreement, both parties can gain greater certainty that their collaboration meets the requirements of the DBA Act.
The use of a model agreement helps to reduce the risks of false self-employment. It provides a framework in which the agreements about the activities, responsibilities and independence of the self-employed person are clearly laid down. This ensures that both the self-employed person and the client are protected from unexpected tax consequences.
What steps can self-employed individuals take to stay compliant?
Zzp’ers can take several steps to comply with the DBA Act and maintain their entrepreneurial status. First, it is important to have multiple clients so that you are not dependent on one party, which reduces the risk of false self-employment. In addition, it is essential to make clear agreements about the work and record them in a model agreement.
Proper record keeping is also crucial for self-employed individuals. This includes maintaining invoices, time records and job confirmations. Regularly reviewing working relationships and updating agreements as needed helps self-employed workers stay compliant. By proactively demonstrating their entrepreneurship, zzpp’ers can protect themselves from unwanted consequences of the DBA Act.
At WerfSelect, we understand that navigating the DBA Act can be complex. We are ready to support both freelancers and clients in finding the right balance and ensuring a successful partnership. Read more about this in our whitepaper.
