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Doing business in the Holland – contractor

We informed you earlier about the fact that it is easy to start doing business in Holland. Once you set up the business and the business is good, you need help. What will you do? Hire a contractor, or hire an employee?

Using the services of a contractor is the easiest. But the contractor is not so dedicated as employees can be. Moreover, a contractor can be more expensive. Some entrepreneurs would not agree with me, because they would state that I should look at the full picture. What if the employee becomes ill or you have a conflict with the employee, then a contractor is much cheaper.

I on the other hand have to state that contracting can only go so far. You cannot have a contractor work for you 40 hours a week for a long period, because is it then still an independent contractor? Or has this contractor already become a deemed employee or your company for which you are liable for the social premiums?

When the contractor is regarded a deemed employee, then the entrepreneur that hired the contractor is due social premiums and wage tax over the invoice amount paid. The invoice amount is then regarded the net salary. This situation can be avoided by a VAR (verklaring) statement the independent contract obtained from the tax office. That VAR statement should show that he is indeed regarded an independent contractor.

Nevertheless we need to add that the contractor completed the form for the VAR himself. That implies if he has not true fully answered the questions, the VAR is not correct. The VAR remains valid for the entrepreneur that trusted the VAR from the contractor, unless it should have been clear for the entrepreneur that he could not have been able to obtain a VAR as he spend all his time and effort to work for you.

In other words, hiring employees can be much more clear and does not need to be more expensive then hiring a contractor.

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