By rebalancing the labour market, this government wants to make self-employment and self-employment more future-proof. In a letter, the cabinet informs the House of Representatives of its views on the abolition of the enforcement moratorium from 1 January 2025. We provide some highlights from this letter that we think will be of interest to you.
Penalty policy
The government realises that the lifting of the enforcement moratorium can be an exciting moment for employers and workers and requires effort. Therefore, the government wants to prevent parties who are demonstrably active in correctly qualifying the employment relationship from being faced with penalty fines immediately after the lifting of the enforcement moratorium. The Tax and Customs Administration will be lenient in imposing penalty fines on parties who can demonstrably show that they are working on reducing false self-employment within their organisation. In that case, no penalty fines will be imposed for the first calendar year after the enforcement moratorium ends. This applies to both employers and employees. However, default penalties may be imposed.
End of model agreements
Model agreements have limited added value in qualifying employment relationships for payroll taxes. Therefore, the Enforcement Plan includes an exploration of the future of the model agreement. The exploration provides the following insights:
- It is difficult to reconcile the principle formulated by the Supreme Court that all circumstances of the case must be assessed by means of a prior check of (only) the written agreements to determine whether there is work outside an employment relationship. After all, whether or not there is an employment relationship can only be determined during or afterwards on the basis of all facts and circumstances considered together (holistic approach).
- Model agreements have a more limited effect than originally intended and create false security. Less than a quarter of the agreements submitted have been approved and the certainty obtained is conditional because that certainty depends on follow-up in practice. For example, Deliveroo used a general model agreement, but the court ruled that it was an employment contract.
- Removal of enforcement moratorium increases the financial risk for principals. Principals should be prevented from being surprised by any retrospective levies.
- The objective is to normalise the enforcement on the qualification of employment relationships for payroll tax purposes by the Tax Authorities as much as possible. Approving model agreements that can only provide conditional certainty does not fit in with this.
The overall conclusion is that the current use of model agreements is no longer tenable based on the outcomes of the survey. The government therefore decides that the assessment of model agreements by the Tax and Customs Administration will be terminated.
Based on good governance principles, the current approved model agreements will be honoured until the end date of the approval. The latest end date is in 2029. Based on the approved current model agreements, parties can still use them until the end date of the model agreement. Incidentally, these approved current model agreements only provide certainty insofar as client and contractor actually work as agreed in the model agreement.
In connection with this decision, the government wants to prevent an influx of applications for model agreements prior to the discontinuation of the approval of model agreements. Therefore, no new applications or new extensions will be considered by the Tax and Customs Administration after the date of announcement (date of this letter). The Inland Revenue will emphasise tax control based on the standards framework of law and case law, rather than providing conditional assurance through a model agreement. In addition, an indication can be obtained via the web module and pre-consultation and practical examples can be used. The entrepreneur check can also be used, with the understanding that whether someone qualifies as an entrepreneur for tax purposes does not always say anything about the qualification of a specific employment relationship.
By discontinuing the assessment of model agreements, the government wants to prevent false security being derived from such an agreement. It also prevents the Tax Authorities, similar to 2016, from being inundated with requests to approve model agreements. The cabinet believes that this measure could have a positive effect on compliance by clients and contractors. Theory and practice indicate that a model agreement is not the right assessment framework for working outside employment; it encourages false self-employment.
Note: There will be a lot of information this year about the many aspects of lifting the enforcement moratorium. These are exciting times for clients and self-employed workers. Of course, we are available for concrete advice.
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