Normal employee vs freelance employer

Question

I'm in Amsterdam. I currently have a QA engineer employment with a company that I like, but that I think they could pay me more. I've been contacted for a freelancer QA engineer by a headhunter, for a new company, also in Amsterdam.

I've read about "disguised employment" and heard about risks and big costs. The salary offered for the freelance job is 425 euros per day, which should be around 8500 per month. That is 3 times the gross salary that I have at the moment.

I would like some advices about the risks and taxes. Is it really worth it, or will I take a path full of problems and ambushes? I would consider my engineer skills to be somewhere between junior and intermediate, and I have roughly 70% of the knowledge they are asking in the job description, but they see very interested in me.

Once I will have deduced all the costs (taxes, insurances, etc.) from the 8500 euros, will I have really more money that I currently earn? The same company also offers me a standard 1 year employment contract at about the same salary that I have now, so this huge gross freelancer salary seems suspicious to me. Thanks

Answer 1

If you're at all unsure about the relationship between yourself and a client, you can ask the Netherlands Tax Service for a Declaration of Independent Contractor Status (Verklaring arbeidsrelatie, or VAR). This is a clarification from the Tax Service which tells you what they consider your relationship with the client to be.

There is a Fictitious Employment (Fictieve dienstbetrekking), which is where there is no formal employment agreement/contract but the relationship still behaves as in a way similar to an employment one. This is mentioned here and is quoted below in English (google translate) and Dutch

If there is no real employment, the employment relationship is between client and contractor (and even the helpers of the contractor) are fictitious employment. That means that you treat the employment relationship as a true employment relationship and that you are the deductions from wages must apply the same rules as real employments.

Als er geen sprake is van een echte dienstbetrekking, kan de arbeidsrelatie tussen opdrachtgever en opdrachtnemer (en zelfs de hulpen van de opdrachtnemer) een fictieve dienstbetrekking zijn.

My understanding of this is that even if there is no formal agreement, your client may still be required to deduct your taxes if the government considers this to be fictitious employment.

The best way of knowing what the relationship will be is to ask. You can apply for a VAR on the Tax Service website here (in Dutch). This is the only way to know 100% what the relationship is. The VAR can be given to the client to show that they are obligated to take off taxes for you. The VAR will also tell you more about what your tax responsibility is.

There is more info on the VAR here.