As a freelancer, it is important to realize your position on the labor market. But how do you determine your position in the market and on the basis of which criteria is this determined? In this article we have tried to clarify the position determination criteria consisting of three factors. These factors are: the nature of the assignment, the duration of the assignment and the hourly rate of the assignment. It is important to know that the nature of the assignment is divided into regular and non-regular business activities. Two diagrams have been drawn up to visualize the position determination.
Position with regular business activities
In the figure below, you can see that the highest pay grades in regular business activities can request an ‘opt-out’ arrangement, which is an agreement not to deduct income taxes. This only applies is the assignment does not last longer than 12 months. In the middle segment, you can see that the model agreements are backed by an client declaration and a web module. The clients are responsible for applying for such a declaration. That is important to determine whether income tax and/or other taxes have to be paid to the IRS. The client declaration can be acquired by filling in a checklist/questionnaire on a web module, which is being developed by the government. Although, at the moment, a lot is unclear about what that web module will look like exactly, the idea is that the new system will be a lot more transparent than the old system.
In addition to changes in the middle and top segments, there is also greater transparency in the lower segment, where the minimum hourly rate is set between 15 and 18 euros. If the hourly rate is less than the minimum, in the case of regular business activities, there always has to be a labor agreement.