Dutch ministers considering reducing self-employed tax breaks
A government committee has been formed to develop new strategies aimed at putting the brakes on the growing number of people who are self-employed in the Netherlands.
The results of the review are due in early December, but the outcome is expected to include slashing tax breaks for freelancers, and putting more pressure on their employers.
Recent surge in self-employed
This marks a sharp increase since 2009, when the number of self-employed workers stood at 630.000. If the freelance population continues growing at this rate, it will stand at one million by 2020.
Finding the balance
Far from celebrating this rise in freelancers and flexible working arrangements, the government is increasingly concerned. The committee is examining how and why such growth has taken place, and how they can slow the growth.
The challenge, they claim, is that freelancers cost the state too much in lost tax, whilst simultaneously placing demands on social security: meaning they take out more than they put in.
Cutting tax breaks
Peter Kavelaars, a commission member, has taken aim at the current system, telling the Financieele Dagblad that freelancers are "pampered" by tax breaks. As it stands, the self-employed enjoy a tax-free income threshold of 7.280 euros.
Combined with tax breaks for start-ups and corporate tax breaks for small firms, many self-employed often pay little tax on the first 24.000 euros of their income. Now these tax breaks are under review, with potential cuts a real possibility.
More pressure on employers
The commission also wants to make it less attractive for employers to work with freelancers. By tightening up the definition of what it means to be self-employed - with a review of the current VAR system - ministers hope to clamp down on working relationships in which freelancers have just one client.
If such relationships are uncovered, employers will face a substantial fine. This means added risk and responsibility for companies hiring freelancers.
The commission will publish its initial results and policy proposals on December 1, 2014.
Source: Financieele Dagblad