A VAR clarifies the tax status of the income arising from the working relationship between a person and a company.
If you are self-employed or a zzp'er, you can apply for a declaration of self-employed status to clarify for your clients whether they need to withhold premiums for employees' insurances and wage tax. The Dutch law governing these declarations provides that a client can be sure that he does not have to withhold premiums for employees' insurances or wage tax if an independent contractor provides him with a valid declaration of self-employed status or a declaration of majority shareholder status. Independent contractors can apply for a VAR by completing a request which must be sent to the tax authorities.
There are four possibilities:
- The income constitutes profits from business activities conducted on a self-employed basis (VAR- wuo)
- The income arises from activities conducted on behalf of and at the risk of the company in which the independent contractor is the majority shareholder (VAR- dga)
- The income constitutes wages earned in employment (VAR- loon)
- The income constitutes the result of other activities (VAR- ruo)
If as a client you engage an independent contractor who has a valid declaration of self-employed status or declaration of majority shareholder status, you do not have to withhold wage tax or premiums for employees' insurances and transfer these to the relevant authorities. In that case the independent contractor is not insured for employees' insurances and does not accrue any rights to benefit as a result of this working relationship. This exemption is only valid if the activities carried out for you as a client correspond with the activities for which the declaration was issued and if they are conducted during the period in which the declaration is valid. You are also required as a client to establish the independent contractor's identity and keep a copy of the identification documents produced and the declaration on file.
Expatax can help you with the request for a VAR.