Under certain circumstances, it is possible to enter into an agreement for services instead of an employment agreement in connection with the performance of activities.

In the event of an agreement for services, the contractor performs a job for the client. The agreement of services is not the same as the employment agreement, also the client does not have to withhold and pay income tax and national insurance contributions.

If, later on, it becomes clear that income tax and national insurance contributions should have been withheld and paid, the Tax and Customs Administration may subsequently claim such tax and contributions as yet. This is why it is crucial that prior to entering into the agreement, it is reviewed as to how parties relate to each other.

It may sometimes be unclear for clients whether they have to withhold and pay income tax and national insurance contributions for contractors. Until 1 May of this year, the Declaration of Independent Contractor Status (VAR) provides clarity in this respect. A contractor may apply for a VAR to have the relationship interpreted by the Tax and Customs Administration. The Tax and Customs Administration will then state their view as to the nature of the relationship between the parties. Depending on this view, the client will not have to withhold and pay income tax and national insurance contributions; the contractor will subsequently not be covered by employee insurance schemes, and can, therefore, not claim benefits.

On 1 May 2016, the Assessment of Employment Relationships (Deregulation) Act (Wet DBA (Deregulering Beoordeling Arbeidsrelaties)) will come into force, and the VAR will be abolished. As from that moment, it is advisable for the client and the contractor to use a model agreement, or to have your agreement reviewed by the Tax and Customs Administration prior to the start of the work. All-Right Advocatuur can assist you in this process.