Freelance/SEP
You are a specialized professional and are considering putting your personal knowledge, skills, experience and added value on the market. You wish to offer and supply your services to clients as an independent operator. But will you be ready to get started as soon as you have registered with the Chamber of Commerce and applied for a VAT number and a Declaration of Employment Status of the Dutch Tax Office (VAR)?
Despite the fact that numerous professionals set themselves up as independent contractors each month, the question remains whether the Tax Authorities consider you a Self Employed Person (SEP) or more of a freelancer or even fictitious employee of your client, with all the consequences this entails. The fact of the matter is that a Declaration of Employment Status is not the be all and end all.
Enterpreneur of employee
The term freelancer has no significance whatsoever under Dutch Tax law. According to legislation, a natural person is either an independent operator or an employee (albeit a fictitious one perhaps). This decision is of the utmost importance to your personal circumstances and future financial commitments. In principle, both you and your client have to make the decision concerning your employment status in advance. In the event that the Tax Authorities later adjudge it to be a different status, however, then it may have far-reaching financial repercussions both for your client and you personally.
Running your own business as an SEP is particularly appealing in terms of the fiscal benefits it offers in the long term. We would therefore advise you to carefully consider your future and the means by which you intend to offer your knowledge, skills and experience on the market.
Payroll
After all, you also have the option of carrying out assignments for your client on the basis of a payroll set-up. Operating on the basis of such a payroll set-up - usually a temporary employment contract based on the number of hours worked - can also offer a complete solution, as well as the desired security with regard to your personal situation. We have noticed that people are increasingly opting for a tailor-made payroll solution, instead of running the risk of operating as a fictitious SEP...
Are you an entrepreneur who plans to do more than simply invoicing your client each month for the hours you have worked? Do you intend to invest or expand? Or perhaps engage staff of your own? Do you execute long-term projects, lasting over 18 months? Do you intend to execute projects for your former employer? Do you have to follow all of your clients' instructions to the letter? Are you going to work a sufficient number of hours within and for the business; i.e., over 1200 hours a year?
Further information for (prospective) SEPs or freelancers can be found on the following Dutch websites:
www.belastingdienst.nl
www.minszw.nl
www.kvk.nl
You are naturally also welcome to approach Source's consultant Jan Arwanitidis. They will gladly answer your queries, discuss all the major aspects and issues with you, as well as offering you advice free of further obligation.
