7 November 2017
On October 10, 2017, the Dutch coalition agreement was published. This coalition agreement proposes significant tax measures for self-employed persons without employees. Van Doorne provides an overview of these significant tax measures below.
Replacement of the DBA Act
- The Employment Relationships Deregulation Act (Wet Deregulering Beoordeling Arbeidsrelaties; "DBA Act") will be replaced. The new act will determine on the basis of two elements (the hourly rate and the duration of the agreement) whether an employment relationship qualifies as an employment agreement or a contract for services.
- In the event of a low hourly rate (125% of the minimum wage or lowest wage scale in collective agreements) in combination with a longer term contract (longer than three months) or in combination with the performance of regular business activities, it is determined that the employment relationship qualifies as an employment agreement. In case of a high hourly rate (probably above € 75 per hour) and a short term contract (shorter than one year), it is possible to opt out of payroll taxes ('opting-out').
- For self-employed persons without employees which earn income based on an hourly rate that exceeds the low hourly rate, a so-called 'Client Statement' is introduced. This statement gives the principal the assurance that no payroll taxes are due. The Dutch Tax Authorities will in the first year after introduction of this law apply a restrictive enforcement policy.
Reduction of the self-employed persons deduction
- As of 2020, there will be an accelerated reduction of the self-employed persons deduction, namely in four steps of 3%. This will result in 2023 in a self-employed persons deduction at the proposed basic rate of box 1 of 37% (rounded). From the coalition agreement it can not be concluded whether other deductions, such as the SME profit exemption, will also be reduced.
Personal income tax - adjustments box 1
- The four bracket regime in box 1 will be replaced by a two bracket regime with a basic rate of 36.93% and a top rate of 49.5%. Furthermore, the general tax credit and employed person's tax credit (on balance) will be increased.
Increase of the low VAT rate to 9%
- As of 2019, the low VAT rate will increase from 6% to 9%. The low VAT rate applies to primary necessities of life such as food, agricultural products and medicines. Furthermore, the low VAT rate applies to cultural and recreational services as access to the movies, museums, music and dance performances and providing the opportunity to practice sports and the supply of books and magazines.