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The VAR-Statement ("Verklaring arbeidsrelatie" or "VAR")

Last updated: 21-09-2020

For people who do not work on the basis of an employment contract it can be relevant to know upfront how they will treated for the levy of Dutch income tax, wage tax, social insurance contributions and the income-dependent health insurance contribution (in Dutch: Inkomensafhankelijke bijdrage Zorgverzekeringswet” or “Zvw”).

Also third parties, typically the client, can have an interest in this qualification, since they may also be facing obligations in view of the potential (deemed) employment relationship under the Dutch Chain Liability Act (in Dutch “Wet Keten Aansprakelijkheid”or “WKA”) and/or the Lending In Liability Act (in Dutch “Wet Inlenersaansprakelijkheid”).

For the levy of Dutch income (and wage) tax, a distinction must be made between the following different qualifications of the activities performed, for which different employment relationship statements (in Dutch “Verklaring ArbeidsRelatie” or “VAR”) can be issued:

  • income from employment;
  • income from other labor;
  • income from a private enterprise;
  • income as director with a major shareholding.

Each category of income has its own rules to determine the taxable basis, which may deviate significantly in particular with regard to the applicable tax rate, available tax deductions, allowances and tax credits.

A client may have a Dutch wage tax withholding obligation if it pays a remuneration to a person which must be qualified as an “employee in fact”. For the levy of wage tax, employee social insurance contributions and the Zvw contribution a "substance over form" approach must be applied.

Before 1 May 2016 it was possible to receive a so-called employment relationship statement (in Dutch: "Verklaring arbeidsrelatie" or "VAR") from the Dutch tax authorities. As per 1 May 2016 the VAR-statement has been abolished and was replaced by so-called "model agreements". The model agreements have attempted to provide certainty on whether an individual is actually an employee of a company. However, these agreements may still result in uncertainty with both individuals (acting with their private enterprise, or ZZP-ers) and contractors, even more if the situation is not de facto covered by a model.

New legislation regarding the qualification of the employment vs independant relationship is a matter of continuous debate and drafting.

The above information is prepared with utmost care, but it cannot be guaranteed that the rules have not changed since the date of publication or that your personal situation triggers the application of specific rules which deviate from the above. Before you use this information we therefore strongly recommend that you consult us to determine your personal Dutch income tax position. If you require our follow up, you can contact us via e-mail or call us at our offices in Amsterdam + 31 (20) 570 9440 or Rotterdam + 31 (10) 2010466.

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