Legal Framework

Explanation

The Netherlands now has more than 1 million freelancers, and this number continues to increase. One of the reasons for this is that an ever-larger group of workers has the need to work without a permanent contract and under their own management. Verloning.nl started in 2012 to serve this growing group and meet its needs.

Employment Status

Verloning.nl takes care of the accounting for freelancers but is not involved in the conditions that the freelancer agrees with their client. The registered person does, however, appear on the payroll under notional employment for Compensation, whereby the (wage) tax and social security contributions due are deducted by withholding tax.

Both the payroll tax and the Healthcare Insurance Act (ZVW) and the employee insurance schemes have so-called fictitious employment; even when there is no real employment contract (between an employee and employer), a designated withholding agent must deduct wage tax (payroll tax and national insurance contributions) and pay contributions and any employee insurance contributions together with ZVW. This concerns situations where the employment relationship resembles an employer/employee relationship, but not all characteristics of an employment contract are met, namely wages, authority, personal nature and intention.

Notional Employment

For the purpose we have in mind, we use two forms for notional employment, for the person who pays the wages.

  • The scheme for opting in (Article 4 of the LB Act and 2g and 3 Wage Tax Implementation Decree 1965 (further Ex. LB)). Under this scheme, a taxpayer can report to the tax authorities together with the withholding agent and make voluntarily payments. The opt-in scheme applies exclusively to wage tax and national insurance contributions.
  • The equality scheme (Article 7 of the LB Act and Article 2c and Article 3 Uitvb LB): someone who, unlike an entrepreneur, usually performs work at least two days a week for a gross income of at least 2/5 of the statutory minimum wage, is in notional employment (Article 4 letter e of the LB Act and 2c Uitvb LB). This regulation also exists with regard to employee insurance on the basis of Article 5 of the Sickness Benefits Act, Article 5 of the Unemployment Insurance Act, Article 5 of the WAO and Article 8 of the WIA together with the Decree on the designation of cases that1 are regarded as employment. Article 6 of this Decree states that the employer is considered to be the person who is obliged to pay wages.

Based on the above, third parties may act as withholding agent. For example, the Sociale Verzekeringsbank uses this scheme to pay PGB (Personal Budget) to healthcare providers when the healthcare provider does not want to become self-employed. Verloning.nl also uses this to give freelancers peace of mind when delivering their services.

1 The Decree of 24 December 1986, adopting a general administrative measure as referred to in Article 5 of the Disability Insurance Act, Article 5 of the Sickness Benefits Act and Article 5 of the Unemployment Insurance Act Stb 1986.655, as last amended on 14 June 2017. 2017,270

In practice

The contractor chooses to perform work for a client outside of employment (not as an employee), but to enter into a notional employment relationship with Verloning.nl and to have the invoicing of the compensation processed by Verloning.nl.

Subsequently, the client and the contractor conclude a (model) agreement from the assignment to perform work. In addition, the contract to be concluded excludes that it concerns an employment relationship. On the basis of a framework agreement, the contractor can engage Verloning.nl to arrange the compensation.

The contractor and client agree that the compensation on the basis of the assignment agreement will be invoiced by Verloning.nl to the client. At the request of the contractor, Verloning.nl will classify the received payments (after deduction of any premiums for employee insurances and social security benefits) as wages within the meaning of the Wage Tax Act 1964. Verloning.nl will calculate, withhold and pay wage tax and pay the remaining net amount to the contractor.

Verloning.nl has a G account allocated by the Tax Authorities. The client can thus cover their risk of liability for obligations arising from the implementation of payroll taxes and the sales tax. As a result, they have additional assurance that the payments are made from the notional employment relationship with Verloning.nl. Verloning.nl also periodically requests a payment performance statement from the Tax Authorities. You can find the most recent statement here.

Verloning.nl is for freelancers, based on the needs of freelancers

  • Verloning.nl offers accessible security and flexibility to freelancers
    • This increases the degree of insured freelancers
  • Verloning.nl allows freelancers to decide for themselves about income protection
    • But requires insurance in the event of disability, when the freelancer is dependent on their income.
  • Verloning.nl gives freelancers peace of mind by taking the accounting off your hands
    • All payments are made in advance, to prevent surprises, such as a bill from the tax department afterwards.
  • Verloning.nl is employed by its freelancers and is transparent and honest about all payments.
  • Verloning.nl charges a fixed commission of 5%, all products and services are offered to Verloning.nl without a profit surcharge without obligation.
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