Since the implementation of the DBA legislation in 2016, the authorities have been reviewing, adding and extending the regulations continuously with a view of providing clarity about the practical details of the law while still maintaining the initial premise of preventing a growing number of bogus self-employment solutions. 

By scrapping the VAR statement in 2016, the government and tax office have put the responsibility of determining whether a contractor is self-employed or an employee squarely with the contractor themselves and the end client enlisting their services. 

The initial reaction in the business world was favourable, provided that the authorities provided the public with the necessary, appropriate and approved tools to make these assessments. 

These tools were a mix of firmly established criteria, pre-approved model agreements as well an online reporting/assessment system, which when followed correctly would provide a level of certainty and risk mitigation to all parties involved. 

The initial criticism of these new regulations was the time limit imposed on self-employed assignments: 1 year maximum. 

Numerous business and branch organisations have voiced their concerns about this time limit, arguing that such assignments tend to run longer and contractors must have the freedom to choose to provide services to one end client for a longer period of time. Not only to ensure business continuity for the end client but also financial security for the self-employed. 

Despite the signals and calls from the involved parties, the government has failed to take a firm decision on the matter so far. 

The validity of the pre-approved model agreements had been set to 5 year at the beginning of 2016, meaning that the same contract can be used by parties for various self-employed assignments without the need to have it re-approved by the tax office. However each assignment is capped at 1 year.

This 5 year period is coming to an end. If the government does not officially concede to an extension of these agreements, new negotiations would need to take place between governmental and branch organisations. Considering that the branch organisations have voiced concerns about the established legislation at the time of implementation and have continuously commented on the problems of practical execution/use thereof over the past number of years, public support for further negotiations seems thin without proper concessions and proposals from the government side. 

The online reporting/assessment system that was supposed to provide a guideline for assessing contractor relationships has so far not passed beyond a testing pilot stage. The small number of available feedback from testing parties sketches a picture of a lopsided online tool, with complete disregard for a number of self-employed scenarios that occur frequently in general contracting situations, as well a tendency to suggest employment routes rather than self-employment.  So far the system seems to lack finesse and detail, showing a biased approach favouring employment. 

The government has so far not presented any concrete plans to replace the DBA legislation or work to improve the implemented regulations. 

The number of self-employed consultants has not decreased drastically as a result of the DBA. Neither has the number of employed consultants increased, which was the general expectation considering the premise of the DBA.

Even the enforcement of the legislation has been continuously postponed, except in cases where malicious intent is clearly evident. 

Considering that the legislation has been put in place to combat that exact malicious intent, this level of enforcement seems to be the absolute least the government can do to uphold the validity of their own legislation. 

According to information available to us, the relevant government authorities have carried out audits on a total of 104 companies across different business sectors in the course of 2018. It was established that over half of these companies were not following the legislation correctly. 

However only 12 of the 50 plus companies in breach of the law will be faced with follow up audits to check for progress on remedying defects in operations. No fines have been imposed on companies. 

For 2020, the tax office has assigned only 50 full time auditors to carry out investigations into compliance with the DBA. Considering there are over 1.4 million businesses registered in the Netherlands, albeit not all of them working under or with the legislation, the amount of auditors seems to be detrimentally low. 

The Dutch chamber of commerce has reported in 2020 that the total number of people working in a self-employed capacity, whether as zzp or small BV, amounts to 2.4 million. 

Assuming that one auditor performs the investigation of one self-employed and requires 2 days for the investigation, it would require over 200 years to audit all registered zzp/bv structures with the current number of auditors. 

The post The DBA, a failed attempt to prevent bogus self-employment appeared first on Mazura.

Apart from registering a business in the Chamber of Commerce and reporting foreign employees (or sole traders) to the authorities under the WagwEu act (see our blog: https://mazura.com/wagweu-the-dba-and-contracting-as-zzp-in-the-netherlands/) , everyone considering embarking on a compliant journey towards working as a ZZP in the Netherlands must also consider the WAADI requirement. 

The WAADI act has been in effect since 2012 but is not widely known among foreign companies wanting to start business operations in the Netherlands. 

What is even less considered is the fact that even sole traders need to have this registration in place. 

When contractors are presented with the option of working as sole traders in the Netherlands by foreign recruitment agencies, this is sold as a straight-forward, simple and highest retention solution that can be set up within a week. 

What is largely overlooked, is what exactly needs to be registered with the Chamber of Commerce apart from the obvious company name and address. 

Since 2012, every company providing personnel to another business in exchange for payment, whether on a regular or occasional basis, must be registered as such in the chamber of commerce. 

This is the meaning of the WAADI act: allocation of manpower by intermediaries, represented by a specific code of registration in the Chamber of Commerce. 

In practice, the registration is simple and straightforward, but one needs to be aware of it in order to remain compliant and avoid risking fines for both your own and the client company. 

When advised to register as any type of company entity in the Netherlands (sole trader, BV or otherwise), any contractor must also be advised to select the correct WAADI code for the registration. 

Any recruitment agency looking to operate in the Netherlands must undergo the same registration process. 

A true sole trader, working on their own and without outsourcing any part of the activities to another sole trader does not necessarily require a WAADI registration. 

However, if any part of their activity is outsourced or taken over, even temporarily by another sole trader, a WAADI registration is required. 

In another scenario where two sole traders are working under one company registration (either a BV, NV or a Maatschap) must absolutely register for WAADI in the chamber of commerce. For example: you and your partner are registered in the UK as a limited company and only one of you travels for an assignment in the Netherlands. Your limited company must not only fully register in the Netherlands but also obtain the WAADI registration, since you will be regarded as seconding workers to the Netherlands. 

The client companies engaging with foreign recruitment agencies and/or sole traders are required by the local government to perform a check on whether the correct registration is in place. 

The domestic client companies are well versed in these requirements and expect these to be fulfilled by domestic supplier companies, however in cases of foreign companies supplying workforce the requirement can be overlooked due to an extensive list of other compliance needs that need to be met. Unfortunately, this does not exempt any company in the business chain from potential fines.

The post Contracting as self-employed (ZZP) in the Netherlands: WAADI edition appeared first on Mazura.

Recruitment for temporary projects in the Netherlands is slowly starting to pick up after the initial lockdown and Corona measures. 

Only some business sectors have been badly affected by the crisis, mainly the hospitality and catering industry, retail and commercial services. 

The IT sector, medical, chemical and production industries seem to be doing relatively well in these times and these are also the sectors where we are starting to see a slow increase in job postings and hiring for temporary positions. 

So this seems like a good time to touch back on some our most blogged about topics and issues, such as contracting as sole traders and the risks connected to this. 

The self-employed sole trader solution (zzp) is still widely popular among recruitment agencies and contractors. This is understandable, considering the apparent ease to set-up the solution and alleged higher retention. At least when superficially compared to the other option of payrolled contracting under the WAB legislation. 

The readiness of some Dutch end clients to participate in creating a perfect zzp set-up on paper to facilitate easy hiring of temporary contractors greatly contributes to this popularity. 

The ostensible laissez-faire attitude of the tax office enforces the recruiter’s and client’s readiness to participate in this scheme. The threat of a potential audit that is yet to become reality is a calculated risk many companies and contractors are willing to take. And considering the effort a foreign company would need to make to find any information about precedence cases (these are never advertised publicly), who would blame a business for taking a calculated risk?

In this article we wanted to touch upon 2 topics that can be overlooked while calculating that risk: the WagwEU legislation and the topic everyone wants to steer clear of, Brexit.

The Law of employment of posted workers in the European Union (WagwEU) entered into force on June 18, 2016, but we feel it has not received enough attention in the international recruitment circles or the media to put it on the radar of all consultants involved in placing contractors in the Netherlands. 

We have written about this topic in a number of our blogs (please refer to blogs of August 2016 and March 2020 on our website) so we will refresh only the basics in this article. 

• All workers being seconded to the Netherlands by their foreign employing companies, must be reported to the Dutch government via a portal created specifically for this purpose: https://english.postedworkers.nl/online-notification-portal 
• If a sole trader set-ups a Dutch BV for the purpose of their assignment in the Netherlands, they will need to report themselves through this portal as well. 
• Failure to comply with this regulation will result in a financial risk, equatable to loosing a month-worth of billing
• In itself, the process is fairly straightforward, but adds to the amount of red tape one needs to navigate before being able to perform work and bill. 
• Considering that a sole trader needs to register company activity in the Netherlands in general from the beginning, which puts them on the radar of the local authorities, they should be aware of the additional registration/reporting requirements in order to attempt compliance. 

The foreboding Brexit

We are certainly not fully versed in the details of the terms of Brexit, but we can confirm one thing with certainty, since it has been sufficiently discussed and approved by the Dutch authorities: all British nationals will require a work/residence permit in the Netherlands as of January 2020.

Considering that the majority of contractors we encounter come from the UK, this is a requirement they need to be fully aware of. 

In order to meet this requirement, the contractor will need to apply to the immigration authorities in the Netherlands. 

This application will put the contractor on the radar of all other government authorities in the Netherlands, including the tax office and any auditing bodies concerned with the DBA and WagwEU legislations. 

The post WagwEU, the DBA and contracting as ZZP in the Netherlands appeared first on Mazura.

What has become visible in the past few weeks, is the impact of the initial crisis measures on the economy overall and specifically on the payroll sector. 

Numerous reports by Dutch watchdogs, analysts and market-leading companies have illustrated a major drop in job listings and reluctance of hiring and procurement managers to commit to hiring contractors even for short-term projects. 

From our position as a payroll company, we have recently seen many project cancellations, a large decrease in workload on continuing projects, and a complete hiring stop in specific business areas, such as the oil and gas industry. 

The Dutch government has implemented financial aid measures right at the beginning of the Covid crisis in anticipation of a large crisis impact on the economy, with the aim to prevent a complete collapse. 

These aid measures are divided into initial and follow-up packages. 

The first statistics about the initial aid package are now available and show in detail which economic sectors have been hit the hardest. 

Unsurprisingly, the sectors suffering the highest loss of income and turnover are the hospitality & catering branches, as well as retail and commercial services sectors. 

Smaller companies suffer the highest losses and receive the most government aid. 

The sectors least affected by the crisis seem to be the energy and water sectors, with only a 20% drop in turnover.

(Sources: data published by UWV, June 2020)

As a payroll provider, our business falls in the financial services sector, operating for numerous businesses sectors and various industries. 

So far we have been able to keep our business stable and supplement the loss of work time for some of our contractor clients by utilising one of the government aid packages, the NOW. 

We will continue to do so for as long as possible where necessary. 

The NOW aid package has been extended by the government after analysis of the economic situation. The sectors impacted most by the corona crisis are primary beneficiaries of the aid packages. 

Other business sectors that have not been badly affected have seen a small increase in operations in the last weeks, suggesting that the consequences of the lockdown and quarantine can remain manageable. 

Even though the recovery from the crisis will be slow, we hope to see a small but steady increase in the number of job vacancies and placements in the Dutch market in the coming months. Let’s hope we can keep the use of the aid packages to a minimum until then.

The post Government aid in times of corona appeared first on Mazura.

Many people who had come to the Netherlands for short term assignments have been forced or chose to go back to their country of origin while continuing to work for the Dutch client remotely. 

The SVB (Dutch organisation for implementation of national insurance schemes) has recently confirmed that the social security contributions, which every payrolled contractor in the Netherlands is obligated to pay, will remain payable in the Netherlands even if the work is carried out remotely. 

Contractors do not need to change anything in the way these contributions are being made for the time being. 

The post Corona crisis and Social security contributions appeared first on Mazura.

We wanted to update you on the latest developments and draw your attention to the most important aspects you need to keep in mind when hiring, placing and working with zzp contractors. 

End client statement for independents with high rates

The end client will no longer be required to provide a statement confirming the classification of the hired individual as an independent contractor. 

Instead, the client will be able to utilize the webmodule tool to assess the status of the classification of the contractor. 

By answering a number of questions within the webmodule, the client will be able to obtain the authority’s opinion on how to correctly classify the contractor. 

Unfortunately, neither the webmodule nor the questions are available yet, so it is difficult to to provide an example or idea about what information needs to be provided. 

The expectation is that the webmodule will be available in autumn of 2020. 

The behindlying idea is to relieve the client from the difficulties of making such an assessment independently. 

Minimum rate for independents

The proposal to instate a minimum rate which a contractor would need to earn in order to be classified as independent contractor, has been retracted by the government, following resistance by the concerned zzp organisations against this proposal. 

The government expects to follow and incorporate feedback and suggestions from the abovementioned organisations to work out regulations around lower rates without damaging the status of independent contractors. 

Moratorium on Enforcement of the DBA until January 2021

The moratorium is still in effect until at least January 2021, with the exception being made for malicious companies who will be audited and fined even before the end of the moratorium period. 

Summary and Advice

The historical general approach to classifying contractors as independent and the criteria the contractors need to meet for the classification have not changed since the introduction of the DBA legislation. 

The tools used for such assessments have changed and the latest version of these tools stills needs to go live.

Assuming that the average independent contractor earns well above Eur75 per hour, meets the general criteria for independency, and the project allows for independent contractors, working in such capacity is possible. 

Our advice on this topic has not changed: if you as a recruiter can carry out the first assessment and have gained approval from the client to hire independent contractors for the project, chances are high that you can place your candidate in such capacity. 

It is always advisable to speak to us about the details of the placement. Although we try to provide comprehensible information in our blogs, website and conversations, it may be difficult for recruiters to carry out a full thorough assessment. 

The post The post-lockdown DBA update appeared first on Mazura.

If you are a company employing workers who are then seconded or sent on assignments to the Netherlands after 1st of March 2020, you are obliged to report this to the Dutch authorities via an online portal. 

This requirement has previously been outlined in the legislation The Terms of Employment Posted Workers in the European Union Act (WagwEU). 

We have blogged about this legislation all the way back in 2016 and have included the original article for your reference below. 

In 2020, the Dutch authorities are finally ready to enforce and follow up on this legislation, including levying fines for non-compliance. 

In this blog update we want to outline the process of reporting your workers to the Dutch authorities.

The reporting can be done via an online portal and must be done before the start of the work activities. 

Depending on your company situation (registered in the Dutch Chamber of Commerce or only abroad), you would need to choose an appropriate method of logging into the portal. 

Companies registered in the Netherlands can obtain an electronic recognition log-in (EHerkenning) which is also used for other government entities including the immigration department. 

Companies registered only abroad can create a simple log-in account.

All of this can be done via the website of the Ministry of Social Affairs and Employment, which also provides some basic background information under: https://english.postedworkers.nl/online-notification-portal

You would need to provide detailed information about the worker, end client, project location and specifics. 

The information you provide in the portal is automatically forwarded to the social security authorities and the Dutch tax office. 

The fines for failing to report any workers will range between Eur1500 to Eur4500. 

The reporting duty also applies to all self-employed individuals coming to the Netherlands to work through their own companies. 

If you are uncertain about what needs to be done or require assistance on this matter, we will gladly talk you through the process and offer any help we can, just give us a call! We are open and reachable even in these strange times!

Original blog text 22 August 2016

The Law of employment of posted workers in the European Union (WagwEU) entered into force on June 18, 2016.

Mazars consultancy reports. 

The WagwEU, the replacement for the WAGA, aims to protect workers who temporarily work in another European country. The WagwEU covers almost all situations where an employer from other EU countries seconds personnel to the Netherlands. It not only refers to provision of personnel (employment agencies) but also to cross-border services (contracted work).

Dutch employment conditions apply

Posted workers in the EU under the WagwEU are entitled to certain minimum conditions of employment. The so-called “hard core” of these working conditions stems from the following Dutch labor laws:

• Minimum Wage and holiday pay;
• Working Hours;
• Working Conditions;
• Law Placement of Personnel by Intermediaries (WAADI);
• Equal Treatment Act.

The WagwEU stipulations include which income components belong to the minimum wage and that allowances for residence abroad (so-called extraterritorial costs) may not be unlimitedly offset against the salary.

If an employer gets to work in a sector where a generally binding collective agreement applies, the hard core of these collective terms also applies.

Monitoring compliance / Obligations Employers

If the Dutch labor laws are not respected, the Inspectorate of Social Affairs and Employment (SZW) can impose a fine. Also, social partners can impose a claim if the hard core of the collective labour terms is not complied with. 

With the WagwEU, different measures are introduced for better enforcement of the law. Inspectorates from different EU Member States can exchange information and may collect fines across borders.

For the implementation and enforcement of the WagwEU, foreign companies seconding temporary workers to the Netherlands have the following obligations:

1. Information Requirement: Provide information (at the request of the Inspectorate SZW).
2. Documentation Requirement: Keeping of relevant documents of employees, such as identity cards and salary slips, in the workplace in the Netherlands (paper or digital).
3. Contact: Designate a contact person in the Netherlands to act as the contact point for the Inspectorate SZW.
4. Reporting requirements: a preliminary report on where, when and with which employees work is carried out in the Netherlands. The recipient of work in the Netherlands to check whether the (correct) report has been made. 

Failure to comply with the first three requirements can be fined since June 18, 2016. The notification has been postponed until such time that a digital reporting system is available. It is expected that this system will be ready in 2018.

WagwEU also applies to self-employed

To combat bogus self-employment, the WagwEU also applies to foreign self-employed workers. Their activity is classified as cross-border services. Self-employed persons must also comply with the information obligation and have a (restricted) obligation to have certain documents in the workplace. There will be a limited notification requirement for self-employed workers once the digital reporting system is available.

[Source: Mazars]

August 22 2016 

The post New Government Rules regarding Workers posted in the Netherlands appeared first on Mazura.

Since we have been servicing a vast number of Dutch end clients over the years, we have become very familiar with their internal employment conditions. 

Not all end clients have a complex employment conditions structure and we have therefore decided to continue offering third-party payroll services in cases where we can easily apply the full set of end client conditions to the contractor placement. 

We will surely need to look at every case individually to determine the actual possibilities but this approach in general allows us to continue offering the services we have excelled at over the past decade.

This solution entails full tax contribution in the Netherlands, payments of social security contributions, pension and healthcare. 

The second solution we will be offering in 2020 is the independent contractor solution under the DBA legislation. 

Under this option, we would first assess the eligibility of the contractor to qualify as self-employed, the necessity to register the company in the Netherlands, ability to work under the pre-approved model agreement and whether the position is suitable for a self-employed candidate. 

As per the latest developments in the legislation, all contractors with a rate of €75 per hour and above while fulfilling the additional zzp criteria, can be contracted as self-employed without major risks to the end client. 

Our third service in 2020 is the Back-office solution for recruitment companies.

To enable companies who source and place the candidate to offer in-house payroll services under their own company name. We would set-up your (virtual) Dutch back office and run all contracts and salary calculations for contractors under your company name. 

This is what the WAB legislation is trying to achieve (apart from permanent hire by the end clients) and is therefore the most obvious complaint choice for recruitment companies placing medium to large numbers of contractors in the Netherlands. 

The solution offers the possibility to avoid applying the end client labour conditions and being able to second your contractors to Dutch end clients under the staffing industry labour agreement with maximum contract duration of 5.5 years.  

If you are interested in any of the above solutions, or simply want more information about the contracting possibilities in the Netherlands, please do get in touch with us. 

The post The WAB and the future of the payroll business, part 3 appeared first on Mazura.

The new legislation has not been in place long enough to be able to confirm with certainty whether it has a negative effect on the hiring habits of the end clients in the Netherlands. 

However, we are already seeing some consequences of the legislation in the approaches that the recruitment and broker companies are taking to the situation. 

We have also noticed new solutions being implemented by the third-party payroll companies in the run up to 2020. 

Some end clients and broker companies (MSP providers) have now decided to completely discontinue the use of services by third-party payrollers. 

In the cases where the contractor is not employed/payrolled directly by the company recruiting and placing the contractor, the advice of the end client is to utilise the self-employed solution. 

This approach may be compliant in situations where the contractor can be fiscally classified as an independent, fulfilling the criteria set out by the tax office for working through their own companies. 

But by far not all positions qualify for the status of self-employed and can therefore pose financial compliance risks for mostly the end client if used with the malicious intent of by-passing the WAB legislation. 

We have to keep in mind here that if the tax office audits the end client and classifies the self-employed contractors as actual employees, the fines and back-dated tax payments will rest solely on the end client company rather than the individual contractor. 

In our opinion this approach can work if applied correctly within the legal framework but is not suitable across the board. Clients often do not realise that under the WAADI Act the self-employed individuals are entitled to the same labour terms as their internal staff. 

Another creative solution we have noted being offered by third-party payroll companies, as well as large recruitment organisations, so far is appearing to have carried out the recruitment activities themselves whereas the candidates were actually recruited by the clients. This surely seems to satisfy the WAB requirements of combining recruitment and payroll, however the bigger question is whether this approach will hold up to audits where the recruitment of the contractor would have to be proven and evident. 

The usual auditing authorities such as the SNCU, SNA and SZW will be carrying out the audits of the WAB legislation in 2020 and the fines for non-compliance can be divided across the contract chain, leaving the end client potentially exposed to risks. 

Most third-party payroll companies have reverted to applying the end client labour terms and conditions to all contractor placements and taking into account the shorter contract duration possibilities, unless they can traceably prove that the recruitment process was done by them. 

In some cases, the end clients do not even have a complex labour term structure, making it relatively easy for third-party payrollers to apply their conditions to temporary contractors. 

Mazura has long adopted this type of approach to the WAB legislation and always requests the end client labour terms from the recruitment agencies or clients directly prior to actual salary calculations. 

This may seem more tedious for recruitment agencies, but is certainly the most compliant way of dealing with the current legislation. 

The last compliant option under the WAB is for recruitment agencies to start an in-house payroll or for payroll companies to start in-house recruitment services. 

As a company we have decided against the last option since this is not our area of expertise and we do not want a conflict of interest with our recruitment agency partners. 

We have however designed a solution for recruitment agencies who want to start an in-house payroll. 

We will gladly provide more information on this later. 

The post The WAB and the future of the payroll business, part 2 appeared first on Mazura.

With this introduction the government hopes to streamline and balance the jobs market by restricting third party payrolling business in the flexibility of their services to the recruitment industry and end clients. 

The payroll business has long been regarded as being of limited value to the jobs market by the authorities, at times also being seen as exploiting temporary workers by minimising their take-home pay and maximising the profit margins of the recruitment companies or end clients. 

This may be true for some sectors such as construction, agriculture and service industry but definitely incorrect when looking at the banking and IT industries. 

The WAB legislation aims to combine search and selection (recruitment) with payroll services, to discourage independent third party payroll companies from being included in the contractual chain, hereby classifying the payroller as a back-office services provider to the recruitment companies.  Under the legislation only the combined business are able to apply the conditions of the Dutch staffing industry collective labour agreements to temporary placements. 

This move would restrict the flexibility not only of the payroll companies, but also the end clients who may struggle to find suitable combination companies to handle both their recruitment needs as well as payroll requirements of their temporary contractors who are in turn used to being able to select from a large pool of independent third party payrollers to assist them. 

The independent payroll businesses are left with limited (and potentially unsuitable) options of service provision under the new legislation. 

The inability to apply the staffing industry collective labour agreements restricts the length of contracting possibilities and the requirement to apply end client labour conditions encumbers the payroll process immensely. 

The question now is how will the payroll business adapt to the changes and is a combination of recruitment and payrolling the answer to the government’s objectives. Will the WAB actually encourage end clients to employ directly and permanently or backfire into a recruitment halt?

The post The WAB and the future of the payroll business, part 1 appeared first on Mazura.