Freelancer and self-employed, that’s what we want to be

Here everything about the freelancer, the self-employed person, the conditions and the VAR employment relationship statement. Being a freelancer and starting your own business is in demand. You work for multiple clients, work with more freedom and preferably at an attractive rate. The freelancer is his own boss and can manage his own time. An enterprising freelancer knows that it is hard work. The Tax Authorities monitor this, set its requirements for the VAR and FOR and offer tax benefits. Ensure good administration. A lot will probably change fiscally in 2016 and 2017.

Self-employed person and freelancer, what is that?

A self-employed person is a self-employed person without employees. By a freelancer we mean someone who:

  • Practicing his profession independently.
  • Searches for his own customers and individual assignments. So you may not be employed by an employer and must have different clients.

Source: AllClear55, Pixabay

Still employed

A freelancer is paid per job contracted and completed. Please keep in mind that a completed job should not take too long. The acceptable limit is often six months. Otherwise, there is a good chance that the tax authorities will determine that you are indeed employed. An additional consequence is that the service will oblige you and/or your client to also pay the additional (employer’s) share of taxes and premiums. That can add up considerably and it is better to keep that burden off your plate. In these types of cases, a client often requires that the contractor apply to the Tax Authorities for a VAR, an Employment Relationship Declaration , in which the relationship between client and contractor is explained at the start of a year. A freelancer must fall into the category of income from other activities, which includes a VAR ROW. Otherwise, he is not a freelancer in the eyes of the Tax Authorities. A VAR in advance can prevent all kinds of unpleasant tax surprises afterwards. Please note: a VAR is valid until the end of the year of issue. All in all, the tax authorities issue a VAR in four cases:

  • For profits from a business, VAR WUO: your client does not have to withhold wage tax/national insurance contributions from this income. You are not insured for employee insurance.
  • For income from employment, VAR Wage: the client will have to pay payroll tax and employee insurance premiums.
  • In the case of results from other activities, VAR ROW: it is up to the client to assess whether or not there is an employment relationship.
  • When carrying out work for the account and risk of your company, where you are a major shareholder, VAR DGA: you pay the company payroll taxes.

All this also means that a VAR ROW freelancer will have to have multiple clients. If there is only one client, for example with multiple assignments, this may still smell like working as an employee.

Var and the tax consequences

In summary, the issued VAR means the following for you and your client:

Which VAR do you have?

What are the consequences for the contractor?

What are the consequences for the client?

Wages from employment VAR Wages:

You cannot give your client certainty about withholding and paying payroll taxes.

The client must therefore check for himself whether there is a (fictitious) employment relationship.

Result from other VAR-ROW activities:

You cannot give your client certainty about withholding and paying payroll taxes.

The client must check for himself whether there is a (fictitious) employment relationship.

Profit from company Var-WUO:

You can give your client the certainty that he does not have to withhold payroll taxes. With the VAR-WUO, you are not insured for employee insurance and you cannot claim benefits under one of these insurances.

The client does not have to withhold and pay payroll taxes. Conditions are that:

  1. The work on the VAR corresponds to the work you perform for the client.
  2. The work is carried out within the validity period of the VAR.
  3. The client has established your identity.
  4. The client keeps copies of your proof of identity and the VAR with his administration.

Activities for the account and risk of your company VAR-DGA:

You can give your client the certainty that he does not have to withhold payroll taxes. With the VAR-DGA you are not insured for employee insurance and you cannot claim benefits under one of these insurances.

The client does not have to withhold and pay payroll taxes. Conditions are that:

  1. The work on the VAR corresponds to the work you perform for the client.
  2. The work is carried out within the validity period of the VAR.
  3. The client has established your identity.
  4. The client keeps copies of your proof of identity and the VAR with his administration.

Source: Tax Authorities

Chamber of Commerce

A freelancer must register in the Trade Register of the Chamber of Commerce. It is also useful if you are liable for VAT and, for example, want to make purchases at a wholesaler such as Makro. Some freelancers are not liable for VAT, such as journalists and doctors. In principle, sales tax is paid once every quarter. If VAT exceeds 7,000 euros per quarter, a monthly settlement will quickly take place.

Tax authorities’ requirements for self-employed persons

The tax authorities impose a number of requirements before you can go through life as a freelancer. If you meet these requirements, there are also a number of favorable conditions in the form of additional deductions. First the requirements that you must meet according to the Tax Authorities. I list the most important four requirements of the Tax Authorities:

1. Result/profit

There must be a prospect of achieving a positive result. The faster the better.

2. Entrepreneurial risk

There must be an entrepreneurial risk, the risk that you no longer have turnover or are no longer paid for certain reasons.

3. Three clients

At least three clients or customers are required. An additional requirement is that the lion’s share does not belong to one client and that the other clients are named for the show, so to speak. If this is not possible, the tax and premium payments will be much less favorable and you will not be eligible for the tax benefits for freelancers.

4. Hours criterion

An entrepreneur is currently required to work at least 1,225 hours per year and 50% of his working time in his company, but it appears that the current government will soon relax this requirement.

Source: Alexas Photos, Pixabay

Tax benefits

If you have been classified as a freelancer by the Tax Authorities, the Tax Authorities will call you a results beneficiary. You are therefore eligible for a number of deductions. The Tax Authorities and/or Chamber of Commerce can provide you with detailed information about this. I list the most important deductions here:

  1. Deduction of business expenses. Business costs are the costs that you incur within reasonable limits for carrying out your work, such as professional literature, office supplies and so on. You cannot deduct costs that are only of a private nature, and you can deduct costs that may be of a business and private nature to a limited extent. You must also add any reimbursements you have received for the costs to your income,
  2. Partially deductible costs are, for example:
    •  
    • Moving costs.
    •  
    • Costs of housing outside the place of residence for a maximum of two years.
    •  
    • Costs of private means of transport.
    •  
    • A user fee for private property that has been used for business purposes.
    •  
    • A user fee for privately rented resources that you used for business purposes.
    •  
    • A proportionate part of the rental price and any other rental charges.
    •  
    • One is additional rules for home offices.
  3. Self-employed person’s deduction : this is a deduction when calculating profit and depends on the amount of profit from business. The higher the profit, the lower the self-employed person’s deduction.
  4. FOR, Fiscal Old Age Reserve . If you make a profit, you can reserve 12% of your profit for your retirement reserve. This deduction is maximized to roughly 12,000 per year. Tax on the FOR is levied as soon as this money is released in the form of a pension. In fact, this deferred salary is a relatively cheap way of building up pension. Each year you can set aside a certain amount and deduct it at a relatively high rate.
  5. The Starter Deduction as an additional deduction for starting entrepreneurs, which means that the entrepreneur’s deduction can increase considerably in 2016 and 2017.

Freelancer from the WW

If you become unemployed and are entitled to unemployment benefits, working as a freelancer may mean a loss of benefits. After all, you are not available for the labor market during the hours in which you work as a freelancer.

Key lock

Are you a freelancer or are you simply employed by an employer? Arrange it well because it can save you a lot of money. In addition, a VAR often gives the client more clarity about what he or she must or must not pay. Make a good business plan and consider your wishes, goals and financial resources in advance.

read more

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  • VAR disappeared: new client statement 2020 or 2021