It had previously been announced that the Declaration of Independent Contractor Status (Verklaring arbeidsrelatie; “VAR”) was to be replaced with a Decision on Exemption from Payroll Tax Withholding (Beschikking geen loonheffingen; “BGL”). The BGL was widely criticized, including by the Lower House. In light of this criticism, trade unions and organizations representing self-employed individuals advocated an alternative to the BGL comprising two main elements:

  1. a sector-by-sector approach;
  2. a conditional waiver for the contracting party, whereby it only needs to obtain advance certainty once for all the self-employed individuals it contracts.


Of paramount importance to the government is that the alternative reflects the basic assumptions of the bill on the BGL. These are:

  1. that it contributes to the restoration of the balance between the responsibilities of the contracting and contracted parties;
  2. that it expands the enforcement possibilities for the Dutch tax authorities.


In his letter of April 20, 2015 to the Lower House, the Deputy Minister of Finance explained the alternative.

Contracts to be submitted to the Dutch tax authorities

The new proposal will also dispense with the methodology of the VAR. In summary, the alternative for the BGL provides for contracting and/or contracted parties (or their respective interest groups) to submit contracts to the Dutch tax authorities. The latter will then confirm in writing whether the withholding and remittance of payroll tax and social security contributions can be waived.

The Dutch tax authorities will only assess those elements of the contracts that are crucial to answering the question whether an obligation to withhold payroll tax and social security contributions is present. The certainty thereby granted will only apply if the actual activities are performed in accordance with the submitted contract. The Dutch tax authorities are not pronouncing judgment on the contracted party’s personal income tax status.

It is expected that the contract assessment procedure will take, on average, six weeks. The assessment will be in line with the current practice on advance consultation. This means that the assessment will not lead to a decision open to objection. The Dutch tax authorities will, to the extent possible, make assessed contracts public, so that they can be used by other contracting and contracted parties. They will also make model contracts available on their website. Contracting and contracted parties can use these model contracts to obtain certainty without having to submit a written request.

The decision by the Dutch tax authorities will be laid down in writing and will state how long the waiver of payroll tax and social security contributions will apply. A five-year period is a possibility, subject to any legal amendments that may be introduced during this period. The waiver will only apply if the activities are performed in accordance with the contract. Case law could be a reason for withdrawing a previously assessed model or other type of contract for future use.

Types of contracts

In principle, there are three types of contracts that can be submitted:

  1. cross-sectoral contracts;
  2. sector contracts;
  3. customized contracts.


Model contracts without sector-specific features (cross-sectoral contracts) that are therefore applicable in multiple sectors can be submitted to the Dutch tax authorities for approval. It is also possible to draft sector contracts that take account of specific aspects of the sector, such as common terminology or agreements, legislation and sector-relevant regulations on working conditions. In principle, a sectoral contract is not necessary, because the obligation to withhold and remit payroll tax and social security contributions is the same for each sector. Contracting and contracted parties who do not want or cannot make use of the model contracts can draw up their own contract (customized contract) and submit it to the Dutch tax authorities. If necessary, the contract can be modified in consultation with the Dutch tax authorities, so that a waiver of payroll tax and social security contributions can still be obtained.

The Dutch tax authorities aim to have a number of generic and sectoral model contracts assessed and placed on their website by mid-October 2015.

Not complying with the activities described

If, in practice, it appears that the work is not performed according to the contract, the payroll tax and social security contributions will not be waived. In that case, the Dutch tax authorities can demand that the contracting party correct this or they can impose a supplemental assessment for payroll tax and social security contributions. Depending on the circumstances, a penalty can also be imposed.

Labor law

The alternative proposal in no way prejudices current labor law. It is therefore possible that a court may rule, at a later stage, that there was an employment contract, despite the fact that the Dutch tax authorities had decided that the particular contract did not create an obligation to withhold and remit payroll tax and social security contributions. If a court rules that there is an employment contract, then the model or other type of contract on which it was based will have to be withdrawn from future use. In that case, the contracting party can, in principle, – if necessary with retroactive effect – realize an entitlement to a benefit, for example. Insofar as the work is performed according to the contract, it is in principle not possible to impose a supplemental payroll tax and social security contributions assessment on the contracting party.

Consequences for the notional employment of deemed employees and home workers

The introduction of the alternative to the BGL will require changes to the rules on deemed employees and the rules on home workers. The reason for this is that in a large number of cases the Dutch tax authorities cannot unreservedly assess on the basis of a model or other type of contract whether a contracting party is obliged to withhold and remit payroll tax and social security contributions. The purpose of amending the legislation will be to allow the Dutch tax authorities, when assessing a model or other type of contract, to only examine whether there is an actual employment relationship or whether this involves notional employment other than the notional employment for deemed employees or home workers. If a contract does not give rise to an actual employment relationship or no other type of notional employment other than the notional employment for deemed employees or home workers applies, the Dutch tax authorities will decide that there is no obligation to withhold or remit payroll tax and social security contributions.

The amendment to the legislation will mean that the notional employment for deemed employees and home workers will not apply if:

  • the parties have signed a model or other type of contract that the Dutch tax authorities regard as not giving rise to an obligation to withhold and remit payroll tax and social security contributions;
  • the work is performed in accordance with that contract.

This must be stated as such in the contract. 

Follow-up and anticipated effective date

If the proposed alternative has sufficient support in the Lower House, the bill on the BGL will be amended. The Deputy Minister is aiming to have the legislation take effect as of January 1, 2016. The current VAR system will continue to apply until then.

Click here to download the memorandum in pdf format