Tuesday 11 May 2021

Ministers look at slashing freelancer tax breaks, hitting employers who use self-employed

construction workers wikimedia commonsMinisters are developing plans to stop the growth in the number of self employed by cutting tax breaks and making it harder for employers to use freelancers, the Financieele Dagblad said on Tuesday.

Some 800,000 people in the Netherlands currently work as freelancers or as one man companies (zzp’er), up from 630,000 five years ago. That figure is expected to top one million by 2020.

The government is concerned that freelancers are costing the treasury too much in lost tax and is looking at ways to reduce this, the paper says. The prime minister and ministers of finance, economic affairs and social affairs hope to publish their first ideas in early December.

However, research papers leaked to the FD show that the self-employed tax-free allowance of €7,280 is likely to go, and the tax break for start-ups and the corporate tax break for small firms are also up for discussion.

A combination of these three measures mean many self-employed pay very little tax over the first €24,000 of their income, the paper quotes un-named sources as saying.

‘The self employed are too much wrapped in cotton wool,’ Erasmus professor and commission member Pieter Kavelaars told the FD.


Ministers are also making efforts to make it less attractive for employers to use freelancers by tightening up the definition of self-employed via the tax office.

If the freelancer only has one employer, they will be considered to be pseudo self-employed and the employer will face hefty additional charges, the FD said.

The FD article has generated a heated debate on the paper’s website, with dozens of people pointing out that freelancers are not entitled to unemployment benefit or incapacity benefit and have to pay for their own pensions. They also have to pay thousands of euros in extra health insurance costs.

‘How stupid of me. I thought freelancers were a useful and flexible way for companies to bring in specialists and as entrepreneurs they don’t appear in the unemployment statistics,’ wrote a Mr Werkman.

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