EU Posted Workers

As of 2019, a notification system for workers posted in the Netherlands will be made available online by the inspectorate of the Ministry of Social Affairs and Employment (SZW). Please read below what this means for you as an employer temporarily hosting European workers in the Netherlands.

Employers are obliged to assign certain minimum terms of employment to the personnel that comes to the Netherlands to work temporarily. Key to the adopted legislation is:

Equal pay for equal work at the same place

To ensure this principle employers need to comply with certain obligations. Failure to comply can lead to administrative fines between €335 and €20750 per employee based on the specific circumstances.

Obligations

  • The obligation to provide information: 
    to the inspectorate, on request; 
  • The duty to report: 
    to the respective authorities in the member state of posting;
  • The duty to retain: 
    copies of specific employment documents related to the posting;
  • The obligation to appoint: 
    a representative to liaise with the labour authorities and inspectorate in the host country

 

How will EMG assist your company?

  • Program implementation to ensure your company’s compliance with the changing posted worker rules:
    Compliance training for stakeholders – tools & tricks to flag complex situations – workforce verification check;
  • Ensure correct retention of documents:
    Reducing administrative burden by assistance of our experienced immigration consultants;
  • Prepare and file all required posted workers notifications to the inspectorate of the SZW:
    Our team will notify the respective authority to ensure correct notifications;
  • Ongoing compliance monitoring:
    Our team will be available for advice and to conduct monitoring whenever needed.

This blog was written by DBi-member Dominique Coenen of Expat Management Group

Transfer of assets to children or grandchildren

After your death, your assets will go to your beneficiaries. Your beneficiaries will have to pay inheritance tax on their share of the estate. If you have no will, then legal succession law will apply. In many cases, this basically means that the spouse and children will inherit equal shares, whereby the usufruct of the children’s shares goes to the spouse. The children will acquire a claim on the spouse. The spouse will be entitled to a high exemption. However, the exemption for the children is limited.

Will?


Legislation can work in your favour, but a good will can still help to save taxation after death. Sometimes the choice is made for a rescheduling, as opposed to, a saving of inheritance taxation. A possible reason for this is that funds are tied up, in a house or investments for example. It can be fiscally beneficial to allow grandchildren to inherit by, say, including their legacies in the will. A grandchild can inherit a sum of 20,731 EUR from their grandparents tax-free. When you have a will, it is a good idea to check if it is still up-to-date and appropriate to your current situation and wishes. If you do not have a will, why not consider drawing up one?

Use the endowment exemptions


You can limit the levying of inheritance tax by transferring (part of) your assets to your children during your lifetime. You can make optimal use of the existing exemptions by spreading out endowments over that time. Endowments to your children are exempt from endowment taxation up to 5,363 EUR per child. For children between 18 and 40, a once-off increased exemption of 25,731 is applicable. This increased exemption can be increased to 53,062 EUR if the endowment is linked to an expensive study by the child. If your child has made use of an increased exemption before January 1, 2010, an additional endowment of up to a maximum of 27,781 EUR for study or accommodation is exempt. Endowments to grandchildren or others are exempt up to 2,147 EUR.

Endowment exemption for one’s own residence


If you making an endowment that is related to the financing of the transferee’s own residence, then a very generous exemption of 100,800 EUR is applicable. In order to make use of this exemption, there must not be any family connection between the giver and the transferee. The sum of 100,800 EUR is decreased with earlier-applied increased exemptions, insofar as it concerns endowments from parents to children for their own residence or studies. In certain circumstances, it is possible to add an earlier endowment to children for their own residence tax-free.

Limit the levying of tax in Box 3


An individual’s assets, not coming under box 1 or box 2, come under box 3. Company capital and one’s own residence fall under box 1, while shares of significant importance come under box 2. Debts are deducted from assets in box 3. However, this does not apply for tax liabilities. Only tax inheritance liabilities can be classified as debt in box 3.
You can limit the levying of tax in box 3 by paying your tax liabilities before the turn of the year. If you expect that you will have to pay (more) taxation, it is a good idea to ask the Tax Authorities for a provisional assessment, or to file a return and to pay the assessment before the cut-off date. If you have made the request not later than eight weeks before the end of the year, but the Tax Authorities have not yet replied, or replied too late, to your request, then you cannot yet classify the amount to be paid as debt in box 3.

Make use of exemptions


There are various exemptions in box 3, for works of art and scientific objects, and green investments for example. It can be attractive to turn taxable assets into exempt assets (in time). If you invest green, then are you not alone saving on taxation in box 3, but you also benefit from an extra levy deduction in box 1 to the value of 0,7% of the value of the exempt investments. For green investments, an exemption up to a maximum of 57,845 EUR (115,690 EUR for fiscal partners) is applicable.

Answers to questions on draft legislation ATAD 1

The State Secretary for Finance has added to answers he recently gave to questions regarding draft legislation for the implementation of the first EU directive combating tax avoidance (ATAD1). This concerns questions regarding the use and possibilities for the adaptation of substance requirements in Dutch laws and regulations. Demands are being made in several areas on the presence, activities and extent of companies, for example when giving advance certainty and with anti-misuse provisions.

Just this month, the State Secretary announced his plans for the revision of ruling practice. In an explanatory statement to this, he touches on future substance requirements that are being made in order to qualify for advance certainty. In the respective Corporate and Dividend taxation laws, substance requirements have been included under anti-misuse provisions. Current Dutch substance requirements satisfy European law criterion for combating misuse. The possibility of strengthening substance requirements is limited by European law. This sets as a requirement that completely artificial arrangements are in question.

Based on a judgment by the European Court of Justice, a rebuttal scheme will be included for cases where substance requirements are not met but where there is no question of completely artificial arrangements. By including a rebuttal scheme, substance requirements can be increased. However, the State Secretary expects that this increasing of requirements will lead to more legal uncertainty. For this reason, he is particularly reluctant to increase substance requirements.

 

Do you have questions regarding the substance requirements or Withholding taxes in general? Please feel free tocontact us

Is a loan to a private company (still) commercially viable?

A loan that a director and majority stockholder provides to their own private company, due to the workings of the provision regulation, comes under Box 1 of income taxation. The interest that the private company pays is deductible from profits and progressively taxed on the director and majority stockholder. The claim decreases in value when the private company can no longer fulfill its interest and reimbursement obligations. The director and chief stockholder can offset this reduction in value against his income unless the loan is not commercially viable. This happens if the director/majority stockholder runs a default risk that an independent third party would not have accepted. The reduction in value of a non-commercial loan is a net capital loss.

Before proceeding to your limited company with a loan, you would do well to examine if a bank would be willing to provide finance at comparable conditions, in order to reduce the risk of a loan not being commercially viable. Factors that influence the commerciality of a loan can include the extent of the loan in relation to one’s own capital, duration, reimbursement obligations, the percentage of interest, subordination to other debts and securities provided. Furthermore, when guaranteeing debts of the private company, you are compelled to trade commercially.

In order to limit debate about commerciality, it is advisable to draw up a loan agreement and to use commercial interest and remuneration conditions. Do not forget to seek securities and apply, where needed, an existing loan agreement.

Established commitments must, of course, be respected. Not fulfilling the conditions with regard to interest or remuneration, will put the above in a perspective.

Intership SEO and Content Specialist.

Today, the internet is the key media form to promote your international business.  If you want to promote your brand, attract customers and compete with your competitors, merely hosting a website will not suffice.  In order to even be found by search engines, you need to be a specialist who monitors your presence in online marketing, enhances your content and creates brand awareness on social media.

Are you interested in online marketing, content creation, and social media?  Would you like to be a part of a small, fun and motivated team?  Is your written and spoken English good?  If so, apply for this vacancy for an SEO- and Content Specialist!

Continue reading

Nothing new under the sun at Energy Trade Fair Ecomobiel, or maybe a little bit?

Holland hosts many Trade Fairs and Ecomobiel is one of them.

What

The Yearly Energy Trade Fair in the Brabanthallen, Den Bosch.

About

Energy, of course; managing, generating, storing, loading, distributing, measuring, charging, installing, constructing, saving, developing or renewing energy.

What to see

Rows full of blue and black solar panels, heat pumps, electric scooters, boilers, heaters and (for an amateur) incomprehensible boxes with undoubtedly much AI-intelligence inside, but also new insulation and insulating building materials like foam.

What was missing

This year (in my personal opinion) no real innovations, breakthroughs, eye-openers, surprising perspectives, financing, methods to increase support and inspirational design, biogas, hydrogen, tidal energy or interesting gadgets. So it mostly concerned applied technology and not a look into the future or disruptive breakthroughs.

This Trade Fair is of course really meant for craftsmen and is very strongly focused on existing (state of the art) technology that advances slowly every year, every year a percentage more profit or efficiency; the ‘quiet progress’ let’s say. For a real spectacle, you have to visit Disneyland or talk to Elon Musk in private.

Exceptional was perhaps a concept car of a student team from Delft University with a hydrogen car.
Perhaps the energy consultancy sector could become the fastest grower in this industry, because people get confused and the choice stress increases, so maybe a personal coach is needed to guide companies and individuals through the jungle of possibilities.

What did we learn as Subsidy Consultants? First of all many companies waver with subsidies, such as ISDE and EIA (which they usually submit for their own customers). I felt that there was a lot of focus on private homeowners and on electricity. One of the workshops (by Alklima) was about neighborhood-related Smart Grids, but in the end there appeared to be no practical solution and the ball lies with Housing corporations. A different trend is that in the coming 10 years many legal obligations will come, to speed up investments in energy transition. For example energy labels for office buildings in 2023 and a ban on placing gas boilers in homes from 2021.

Of course, there is plenty to do for us as De Breed & Partners: there are enough innovation schemes in the top sector of energy, in which developments on the aforementioned themes are supported for Smart Grids, Urban Energy, Demonstration Energy Innovation, Bio-Energy, etc.

So, after all, we got some energy out of Ecomobiel and we consider attending again next year.

 

Picture: Hydrogen concept race car by Delft University and Shell.

This blog was written by DBi-member Raf Grubben of De Breed & Partners

Venture Capital Invenstments in Cryptocurrency

 Among other positive developments for the blockchain space, 2017 was the year of the ICO (Initial Coin Offering). As public interests in cryptocurrencies heated up towards the latter half of the year, newcomers with fresh investment capital fanned the flames of the already white-hot fundraising model.

 

ICO vs. VC: Two Sides of the Same Coin 

Throughout 2016-2017, initial coin offerings became the default method for cryptocurrency projects to kick-start their revenue stream. For a time, the ICO model was stupid lucrative, for both entrepreneurs and investors. If you had invested in, say, NEO’s ICO (formerly Antshares), you’d be up nearly 280,000%, and even the most modest ICO returns, as with Lisk, come out to 19,000%.

And these profits weren’t limited to the investors. According to Coinschedule, ICOs attracted $95mln in 2016, only to quadruple this figure to $3.8bln in 2017. Even though half of last year’s ICOs are already down for the count, the trend shows no sign of stopping. We’re only two and a half months into 2018, and the $2.9bln raised so far is on pace to eclipse the sum total of investments made in the past two years.

Amazingly, ICOs are still recording exponential investment figures despite 2017s unsavory success rates. Even with the market dragging its feet on a downtrend for most of 2018, startup investments across the board aren’t stopping to pick up any dust. In fact, as 2018’s ICO statistics betray, total cryptocurrency/blockchain-related investments look like they’ll surpass 2017’s record numbers. This includes an old player in the investing game that we might forget in lieu of the rookie ICO: venture capital.

Venture Capital: The Oldschool Alternative to the ICO

Embellished headlines and articles peppered with fascinated curiosity over ICOs would make you think that they are the preferred–if not only–investment avenue for crypto startups. But this is hardly the case.

Venture capital has had its hands in the cookie jar for as long as initial coin offerings have been around. Perhaps they receive less coverage because they’re less of a novelty, or maybe it has to do with the nature of the investment and who’s doing the investing. By their model, ICOs, like the IPOs they derived from, are open to (most) all investors, regardless of accreditation and net worth.

Venture capital investments, on the other hand, come from hedge funds, private equity firms, or persons of extreme wealth. They’re basically individuals and entities with the resources to pour millions of dollars into young and risky-yet-promising projects with the hopes of quality returns on the original investment. 

And ICOs and cryptocurrency, in general, offered more than quality returns. With the right pick, a good investment garnered Wall Street penthouse-worthy ROIs. Still, most venture capital firms have been wary to invest directly into crypto, and with good reason. If you’re playing with millions of dollars, hesitancy is wise in a market whose volatility can just as easily turn an original investment into monopoly money as it can into a digital goldmine.

Rather than a head-on approach, venture capital firms would rather come at crypto from the sides, placing their bets on services or businesses related to cryptocurrencies and blockchain. This could be anything: exchanges, wallet services, development labs, payment solutions, etc.

These are the channels that venture capital is pumping money into, and they’re the same startups that have attracted almost as much attention as ICOs.

Show Me the Money

Over the last few years, venture capital investment may not be quite on par with the multi-billion dollars invested in ICOs, but still, the sum of money flowing in is far from trivial.

According to a Crunchbase News study, roughly 1,000 VC deals have been brokered in the blockchain realm since 2012. These 1,000 have racked upwards of $2.5bln dollars in investments from 2012-2017, with about $1bln of this coming in 2017 alone. Even more impressive, it looks like 2018 could be a record-breaking year for venture capital in crypto. At the time of Crunchbase’s report, firms have already pledged $400mln in funds to a variety of projects. That’s 40% of 2017’s total investment sum in two months.

So far for this year’s tally, hardware wallet manufacturer Ledger has received the most attention from investors. The company raised $75mln from 12 investors in its Series B investing round, the largest contribution coming from the pan-European fund Draper Espirit.

In years past, other industry leaders on Ledger’s caliber have secured their own fairly large share of venture capital. 21 Inc., for example, netted a staggering $116mln in its first round of investing in 2015, the single largest VC investment made in the industry to that point. In its third investment round back in 2015, Circle Internet Financial garnered $50mln in capital, another one of the largest venture capital investments in the industry’s nascent lifetime. The next year, Blockstream and Ripple both beat this capital allocation with $55mln investments each, putting Blockstream’s total VC tally at $76mln and Ripple’s at $96mln. Circle received another round of funding in 2016, as well, with this $60mln in fresh money giving it a grand total of $136mln over the years.

Coinbase, however, takes the cake for largest single round and aggregate investment. In 2017 alone, Coinbase accrued $108mln in their Series D investing round, leaving the company’s total venture capital funding in the ballpark of $235mln. Other notable industry leaders who rode out 2017 on a wave of cash are Canaan Creative ($43.45mln) and BitGo ($42.5mln).

Who’s Coughing Up the Dough?

Crypto’s VC big players represent an eclectic group. Alongside seasoned venture capital firms and high-roller individual investors, you have legacy financial and tech corporations, financial institutions/banks, and crypto-specific capital groups.

SBI Holdings, Google, and Overstock are the most active among their corporate peers in blockchain investments, a report by CB Insights reveals. Each company sports a unique and diverse crypto portfolio, including R3, Ripple, and Kraken (SBI Holdings); Storj, Ripple, and LedgerX (Google); and Factom, Ripio, and Peernova (Overstock).

Large banks and financial institutions have, surprisingly (or unsurprisingly depending on who you’re asking), plenty of cards on the table, too. In fact, many banks began investing as early as 2015. Among these include Citi, Goldman Sachs, and JP Morgan and Chase Co., who all hold positions in R3, Axoni, and Digital Asset among others.

There are a handful of industry moving venture capital firms pouring money into crypto, but out of this mix, the highest bidders are those firms that specialize in blockchain investing. Traditional investors like Draper Associates, Andreessen Horowitz, and Union Square Capital all have skin in the game, but their portfolios are dwarfed by the likes of the Digital Currency Group. By the end of 2017, the Group boasted an investment count of 40 different companies, a number they’ve already looked to increase this year. Tied for second, Blockchain Capital and Pantera Capital both held positions in 8 different ventures by the end of 2017.

Some Takeaways

Venture Capital investment in blockchain has steadily ramped-up over the past few years, and if the beginning of 2018 is any indicator, it shows no signs of slowing down.

Unsurprisingly, the majority of these investments come from blockchain-specific groups, with big name banks and legacy tech businesses leading the way. Most of this venture capital has been raised for companies located in the United States, according to Crunchbase, with the United Kingdom coming in second and Singapore and Switzerland tied for third.

On a basic level, VC investment rounds allow startups to receive large, lump sums of capital to feed their operating budgets, cash flow that they wouldn’t have access to otherwise. Not every blockchain company launches its own coin, so some of these businesses do not have the luxury of running an ICO.

Still, ICOs have attracted more money in the past half decade than VC fundraisers, and this likely has to do with the ICO’s inclusive, low-barrier to financial entry. As the industry evolves, though, we’ll likely see more venture capital gravitate towards cryptocurrencies and blockchain companies, so we’ll see if this old dog can keep up with the budding industry’s new fundraising tricks.

 

This article by Colin Harper was originally published by CoinCentral.com

Bitcoin Futures Trading

The prospect of bitcoin futures trading on major financial exchanges has clearly been bullish for the price of bitcoin. The price at the beginning of this week, hovering around $15,000, is 145% higher than when CME Group announced on October 31 that it would launch bitcoin futures trading by the end of the year, and 53% higher than when news broke of the CFTC’s regulatory approval of these markets on December 1.

But how will futures trading affect bitcoin’s price once it’s launched, especially if institutional capital enters the space? To find out we’ll examine how a futures contract works, as well as the motivations and behaviors of the various players who may speculate on the price of bitcoin using futures.

 

The Basics of Futures Trading


First, a quick primer on futures contracts and how they trade. A futures contract is a financial derivative in which two parties agree to trade a certain good or financial instrument at a future date and at a set price.

For example, buying a 12-month oil futures contract for $60 means you (the contract holder) agree to buy oil at $60/barrel 12 months from now, regardless of what the price of oil is at that time. By agreeing to buy the oil you are “long” the contract, while the person who agrees to deliver the oil then is “short” the contract. Note that futures contracts can be sold at any time on an exchange that trades that particular contract, and the buyer of the contract would then inherit the obligation of the futures contract.

Some contracts can be settled by physically delivering the oil, some allow to settle with cash for the difference between the futures price and the spot price at that time, and some allow both options. Bitcoin futures to be traded on the CME are structured for cash settlement.

Here’s an example of how a bitcoin futures contract on the CME would trade. I buy a BTC futures 12-month contract with a $15,000 settlement price. Let’s assume that on that day 12 months from now, the actual price of BTC is $18,000.

Instead of the seller of the contract selling me a bitcoin for $15,000 and me taking it to an exchange to sell it for $18,000, the contract seller will simply give me the $3,000 difference. This is known as a cash settlement, and usually, the financial result is effectively the same as physical delivery.

 

The risk: could big investors short futures and tank the price of BTC?

Even if the average crypto investor understands futures trading, they won’t be entering this arena anytime soon; each contract is for 5 bitcoin, and the minimum block of contracts in a trade is 5 contracts. At a $15,000 BTC price, that means you won’t be making any trades for less than $375,000.

A key feature of a futures market is that it’s bidirectional, meaning that you can be short the market without the hassle of engaging in a traditional short position (i.e. finding someone to borrow the asset from).

Since the bitcoin futures contracts will be cash settled, betting against bitcoin is now much simpler (though there are a few existing ways to short bitcoin).

Institutional capital tends to be skeptical of bitcoin at best, judging by the statements of Jamie Dimon, Warren Buffett, or Mohamed El-Erian. This shouldn’t be surprising since in many ways digital currencies are a competitor to the long-term business plans of these bankers and investors. These people are highly incentivized for bitcoin to fall in price, or fail entirely.

Add it all up, and bitcoin bulls might start getting a little nervous. The only groups with enough cash to trade these new futures markets are institutional capital, who by and large have a very negative view of bitcoin, and they are about to start trading on the first reliable exchange that will let them short bitcoin at scale!

One could argue there is an enthusiasm gap in play here; if you are a crypto believer with capital, you already went off to start one of the dozens of crypto hedge funds in operation today. For a bitcoin skeptic, your options to express that view just expanded greatly.

 

Counterpoints: the bull case for bitcoin futures

So if bitcoin futures are such a threat to bitcoin, why is the price of bitcoin still rising so fast? Let’s look at some counterpoints to the bearish thesis to bitcoin futures.

First, institutional capital can think bitcoin is the biggest scam since the Dot Com Bubble, but much of it can’t touch these markets to begin with. The Volcker Rule of the Dodd-Frank Act prohibits banks like Jamie Dimon’s JP Morgan from engaging in speculative trading of almost every kind, of which the shorting of digital currencies definitely counts! The move for these bitcoin bears isn’t to short bitcoin, driving the price down, but merely steer clear of it and other digital currencies altogether.

Second, for every traditional hedge fund that can’t wait to short bitcoin, there are others who would love an opportunity to gain long bitcoin exposure but simply doesn’t trust the custody of crypto exchanges, or can’t handle the lack of technical support or constant downtime. (If you’ve ever tried to use a crypto exchange during a hard fork or major crypto news event, it’s hard to blame them).

Up until now, their options were limited to the Grayscale Bitcoin Investment Trust (GBTC) which frequently trades at a 30% to 80% premium to actual bitcoin, showing there is significant demand from investors who, for whatever reason, are restricted from purchasing the actual bitcoins themselves.

Lastly, few investors will look at bitcoin’s rise in price in the last year and have no fear of shorting the asset. When an asset can double in a week, your risk exposure with a short position is enormous – theoretically unlimited.

Perhaps you might believe that bitcoin is in a bubble because it can’t be valued using fundamental analysis, but that was true a year ago as well, and if you put on a short bitcoin position in December 2016 you would have lost about 17 times your initial investment (or in terms of futures trading, you would have been margin called and/or had your position forcibly closed long ago by your exchange).

With a minimum trade exposure of $375,000, those losses will add up pretty quickly.

 

Conclusion: Volatility ahead, but ultimately good for BTC

That doesn’t leave you with a clear decision on whether to go long or short bitcoin in anticipation of futures trading. CME Group’s will launch their bitcoin futures product on December 18, but their smaller rival CBOE recently announced they will beat CME to the punch and begin bitcoin futures trading on December 10th, this coming Sunday afternoon. Various factors could cause the influx of capital to take either long or short position, but either way, it will likely mean significant price swings in the short term.

However, in the long term, this is a significant step toward legitimizing bitcoin and other cryptocurrencies, and should eventually lower the daily volatility of bitcoin as it trades alongside more traditional asset classes.

This article by Wes Levitt was originally published at CoinCentral.com.

Enforcement Plan Labour Relation

Since its introduction, the Deregulations Labour Relations Assessment Law (Wet Deregulering Beoordeling Arbeidsrelaties or DBA law) has caused nothing but trouble. The Dutch Tax Authorities recently publicised a plan of approach for the enforcement of the law. The Enforcement Plan Labour Relations (Toezichtsplan Arbeidsrelaties), as it is called, was presented to show how the Tax Authorities will approach the enforcement of the DBA law. It states that around 100 assignment providers will be visited for an audit, covered as a friendly conversation with a business relationship while just drinking some coffee. The assignment provider will then probably be interviewed about labour relations and the way things work out on a daily basis.

 

Aims

The approach of the Tax Authorities seems to have two major aims. The first one is to get more insight on the practical experiences, which can be used to improve the legislation in this area. Second, they aim to monitor the assignment providers and possibly enforce the DBA law by use of the criterion that an assignment provider maliciously violated the law. This may have some serious repercussions because the Tax Authorities can impose a fine and also start a criminal prosecution.

 

Enforcement Requirements

If facts and circumstances lead to the presumption that there is a (fictional) employment and malice, the Tax Authorities will further investigate, which may lead to enforcement. According to the Enforcement Plan the tax inspector will enforce the law if the following requirements are met:

 (1) There is a (fictional) employment;

(2) There is obvious false self-employment;

(3) The false self-employment is maliciously existing.

 

(Fictional) Employment

In order to assess whether there is a (fictional) employment, two key elements will be investigated. The first one is the agreement between the assignment provider and the contractor. The second one is the way the agreement has been shaped into the actual working activities. A good example of the difficulty to determine the existence of an authority ratio is the Amsterdam Court’s judgement. Based on the text of the agreement and the actual working activities[1], the judge concluded that a deliverer from the food delivery company Deliveroo did not have a labour agreement and that there was no authority ratio.

 

Sef-employment

Furthermore, the tax inspector must prove that there is obvious false self-employment. Up until now, there has not been an explanation of this formula. Hence, it has to be determined by the grammatical meaning. Since “obvious” entails that something is very clear, it should thus be really clear that the self-employment is not what it is made out to be.

 

Malicious Act

Last but not least, the tax inspector must prove that the false practice was a malicious act by the assignment provider to benefit from lower tax and insurance costs. The Dutch Minister of Social Affairs and Employment Opportunities has given a definition of the word malicious in this context. “Malicious is the assignment provider or contractor who deliberately creates or lets continue a situation of obvious false self-employment, because he knows – or should have known – that there is actually a factual situation of employment (and with that improperly benefits financially and/or unfairly affects the playing field).”[2]

The definition does create some uncertainties, because the word “intentionally” is used in the Enforcement Plan, while “should have known”  serves as a sufficient condition for prosecution according to the Minister. “Intention” does, however, require that someone actually knew about it. Therefore, it is difficult to know whether “should have known” is indeed sufficient to assume that something was intentional. The most logical explanation would be that the standard requirements for the term “intention” apply in such situations. Analogically seen, “intention” thus requires one of the party’s to have known about the illegality of the situation, but decided not to take action.

The reasons for the government to interfere in these labour relations between assignment providers and contractors is simple, as such assigments generate less revenue from tax income and the contractors are not insured to the same standards. In my opinion, the second reason should be the government’s main focus, because it is of more importance than the amount of money that our governments receives by taxation.

The same matter applies for all the requirements for enforcing the DBA law. They all depend on the factual situation at that moment and time. With the new approach of the Tax Authorities, the government hopes to easily collect evidence to build a stronger case for imposing a fine or starting a criminal prosecution. They try to get the facts handed to them in a seemingly innocent manner, by visiting you for a simple conversation. When you find yourself in such a situation, it is thus of the upmost importance that  you choose your answers wisely and do not speak impulsively. This is not only to your benefit in order to avoid  involuntary cooperating with your own conviction. You might as well give information to the Tax Authorities that is incorrect which might increase the chance of being falsely convicted. The Tax Authorities and the tax inspector might not tell you, but rest ussared everything you say can and will be used against you.

Yet, there is a glimmer of hope. According to the Dutch Supreme Court, evidence that depends on the will of a natural person and was acquired against the will of a suspect, may only be used by the Tax Authorities in order to impose taxes.[3] Analogically, this evidence depending on the will of a natural person cannot be used to support the imposition of a fine or to support a criminal prosecution charge. In short: words can not hurt you, since theydo not lead to a fine or criminal prosecution if there is no other evidence.



[1] Rb. Amsterdam 23 juli 2018, ECLI:NL:RBAMS:2018:5183,JAR 2018/189, m.nt. Wiewel & van Slooten.

[2]Kamerstukken II 2016/17, 34 036, nr. 44.

[3] HR 12 juli 2013, ECLI:NL:HR:2013:BZ3640,NJ 2014/35, r.o. 3.8.

Caution: Obligation to declare benchmark reports

The Dutch External Financial Relations Act of March 1994 imposes an annual obligation to declare on Special Financial Institutions or SFIs (BFIs in Dutch). These must submit their benchmark report to the DNB Bank (De Nederlandsche Bank) every year for the DNB to investigate the legitimacy of their balances and transactions. Sometimes this is forgotten. Therefore, action needs to be taken.

SFI: Special Financial Institution

All resident enterprises and institution qualify as an SFI, irrespective of their legal form, if:
– non-residents hold a direct or indirect interest – whether or not through shareholding – in the enterprise or institution or otherwise exert influence; and
– these non-residents’ objective it is, or whose activities consist to a significant extent, whether or not these activities are performed in combination with other domestic group companies:

1. to mainly hold assets and liabilities abroad; and/or
2. to channel revenues consisting of royalty and licensing proceeds received abroad to foreign group companies; and/or
3. to generate revenues and expenses that mainly originate from re-invoicing from and to foreign group companies.

Obligation to declare a benchmark report

Hence, if you run a resident enterprise or institution that meets this definition, it is considered an SFI. You are thus obligated to file a benchmark report with the DNB. This also entails that you are legally obliged to register the SFI registered accordingly with the DNB. Based on the benchmark report, which accounts for a company’s balance of payments and international investment position, the DNB can assess your company’s position in the international market and the legitimacy of the transactions. 
Moreover, a composing an annual benchmark report might be to your benefit too, as the report charts the annual growth and economic sustainability of your enterprise or institution. 

Please do not hesitate to contact us for more information on benchmark reports or submitting these to the DNB.