The DBA Act replaces the VAR declaration for the self-employed. In two previous blogs we outlined the background of the new legislation and indicated what it means in practice. The market has already had some time to respond to the initiative of the tax authorities. Both clients, the self-employed and intermediaries such as WIBA IT are not yet satisfied with the new model agreements that have to replace the VAR declaration.
The IRS has approved a special agreement for Mediation. At this point in time, WIBA IT and the IRS are discussing the new Mediation model agreement. Like other intermediaries, WIBA IT is unhappy about the current agreement.
The main obstacle is that the agreement contains a general article that indicates there is no management and supervision, and which is so broadly defined that it is hard to know how to meet the article’s requirements in practice.
Another problem is that the model agreement indicates that an assignment must not last ‘too long’, without indicating what the IRS considers to be ‘too long’.
Own model agreement for mediation
That is why WIBA IT wants to have its own model agreement for mediation approved, to solve the problems outlined above. The IRS will process all model agreements that have been submitted before February 1, at the latest by April 1. It means that, between April 1 and May 1, we will use the new model agreements which will be incorporated in our systems and processes. Until May 1, 2016, the VAR declaration is still valid. Until that time, WIBA IT will use the VAR as a safeguard for the deployment of independent freelancers. In addition, we have until May 1, 2017, to transfer all contracts that are safeguarded on the basis of a VAR, to the new model agreement. Of course, we will be in touch with our freelancers and clients before the implementations about what to do next to facilitate the transition.
Criticism from the market
Other clients and freelancers have also criticized the new legislation. The model agreements make it a lot more difficult for freelancers to get their agreements in order, while clients are also faced with additional paperwork. Furthermore, more and more people suggest there is hardly any false self-employment and that this new approach does little to change it anyway. The question, therefore, is whether the decision to use model agreements for self-employed and clients does not miss its goals. A recently started petition (in Dutch), for instance, gathered 25,000 votes against the new law from freelances. WIBA IT keeps a close watch on the developments and we will adjust our systems and processes as quickly as possible, to meet the requirements of the new legislation and to start using an approved model agreement for Mediation.