Non-EU student work as a contractor for an IT company

[mike.shellhammer]

Hi,

My name is Mike and I am a student of non-EU origin studying here in the Netherlands. Recently I have found a company where I can work part-time as a software developer and because I am a non-EU student, if I work as an employee I have a limitation to work no more than 16 hours per week. Therefore I would like to register an eenmanszaak and work as a contractor for the company. From the research that I have done, I understand that I need to register at the KvK to obtain a KvK number and then report my business to the Belastingdienst to obtain a VAT number. Then do my book keeping and invoice the company monthly and file tax return to the Belastingdienst annually to pay tax. However, besides these, I have no clue what other bureaucracy I need to take care of. Like for example what kind of insurance I need to get for myself and my business and I also heard about something like social security contribution(pension stuff). Could someone give me some explaination on the part that I have no clue about and what other bureaucracy I need to do? Or to who I can also ask this question? Should I hire an accountant or lawyer to explain it to me?

 

Thanks a lot and I hope to hear your advice!

 

Sincerely,

Mike

 

 

P.S. no need for advice about or concerns over my study progress if I work more than 16 hours per week. Last year I worked 16 hours per week and passed all the courses with average grade 8.1. Working part-time can hardly be a problem for my study progress :)

27 januari 2023 aangepast door mike.shellhammer

[Joost Rietveld]

Hi Mike

 

Welcome to the forum.

I won't say a word about studying, you're old enough to handle that yourself.

 

However, working for a company as a freelancer doesn't necessarily mean that the Belastingdienst will approve of this. If this one company is your only client, then it's very unlikely that the Belastingdienst will see you as an entrepreneur. Mostly because all legal demands for employment seem to be there: you have to provide the work, they have to pay you and you are working for them in a relationship of authority. 

 

Those there criteria make for employment rather than freelancer.

 

What's the opinion of the company on this?

 

 

[mike.shellhammer]

20 hours ago, Joost Rietveld said:

Hi Mike

 

Welcome to the forum.

I won't say a word about studying, you're old enough to handle that yourself.

 

However, working for a company as a freelancer doesn't necessarily mean that the Belastingdienst will approve of this. If this one company is your only client, then it's very unlikely that the Belastingdienst will see you as an entrepreneur. Mostly because all legal demands for employment seem to be there: you have to provide the work, they have to pay you and you are working for them in a relationship of authority. 

 

Those there criteria make for employment rather than freelancer.

 

What's the opinion of the company on this?

 

 

Hi Joost,

Thanks a lot for your explaination. 

That was also what I had realized from my research with the info from the Belastingdients and it seems that if I am only getting most of my income from one client then that doens't really count as "self-employed". What exactly are the legal details, I am not sure.

However, the company that I am going to work in confirmed with me previously that this approach works. I am not really sure if it is because they don't have experience with it or it is because they have some ways to bypass such regulations. I will express my concerns with them and see what they say about it.

From your experience, do you see any reason why the company says that this approach works?

[Joost Rietveld]

10 minuten geleden, mike.shellhammer zei:

From your experience, do you see any reason why the company says that this approach works?

Never having been audited, and then assuming that is okay. 

 

Probably the main obstacle is the fact that you seem to be working under their supervision, guidelines and authority. 

[Ward van der Put]

The Dutch regulations for self-employed professionals are outlined here:

 

https://business.gov.nl/starting-your-business/starting-as-a-self-employed-professional/regulations-for-self-employed-professionals/

[mike.shellhammer]

19 hours ago, Joost Rietveld said:

Never having been audited, and then assuming that is okay. 

 

Probably the main obstacle is the fact that you seem to be working under their supervision, guidelines and authority. 

Hi Joost,

Thanks for your fast reply.

I think auditing the process is indeed probably what I need to do. Next week I will contact some local accounting firms and see about it.

I have also researched into "false self-employment" and what you suggested was indeed a possible problem. I think I have to discuss this with the company. If the work can be outsourced to me as assignments with more freedom from my side on how to conduct the work, it seems that it wouldn't count as an employment. Hope that's correct?

Last but not least, is the law against false self-employment currently being enforced? If not then I guess it should be fine since I am most likely only going to work for them for 6 to 12 months.

 

Kind regards,

Mike

29 januari 2023 aangepast door mike.shellhammer

[mike.shellhammer]

19 hours ago, Ward van der Put said:

The Dutch regulations for self-employed professionals are outlined here:

 

https://business.gov.nl/starting-your-business/starting-as-a-self-employed-professional/regulations-for-self-employed-professionals/

Hi Ward, thanks a lot for refering me to this page. The info there really helped!

[Joost Rietveld]

32 minuten geleden, mike.shellhammer zei:

I think I have to discuss this with the company.

That's a good first step

33 minuten geleden, mike.shellhammer zei:

If the work can be outsourced to me as assignments with more freedom from my side on how to conduct the work, it seems that it wouldn't count as an employment.

"More freedom" is not much to go on. It will all boil down to being able to prove that there is no relationship of authority. Btw: with audit I meant a tax audit, not an accountant audit. 

 

35 minuten geleden, mike.shellhammer zei:

Last but not least, is the law against false self-employment currently being enforced? If not then I guess it should be fine since I am most likely only going to work for them for 6 to 12 months

It is enforced still. Furthermore, the Dutch tax services are able to back track your taxes up to five years. So going forward on an assumption that you won't be audited would be unwise 

[mike.shellhammer]

5 hours ago, Joost Rietveld said:

It will all boil down to being able to prove that there is no relationship of authority.

Hi Joost, 

Thanks a lot again for your always fast reply.

I think that's something possible to discuss with the company. Do you have any suggestions on proving no relationship of authority. Or maybe not direct suggestions but some kind of an example? Then it helps me with starting this discussion with the company.

 

Kindest regards,

Mike

[Joost Rietveld]

You're welcome

 

Usually the necessary freedom to be qualified as a freelancer comes from working your own hours, at a place you choose, with means that you own and only having to obtain your goal, in stead of being directed towards it

[mike.shellhammer]

1 hour ago, Joost Rietveld said:

You're welcome

 

Usually the necessary freedom to be qualified as a freelancer comes from working your own hours, at a place you choose, with means that you own and only having to obtain your goal, in stead of being directed towards it

Hi Joost,

Thanks for this explaination.

As far as what I understand from it, I think there really shouldn't be a problem then. Even if the company have me working as an employee, they would still give me an on-call contract and I am always getting paid by the hours I work and I kind of get to decide when I want to work as long as I coordinate with my colleauges. With a freelancer contract, it would be the same. And with the job that I would be doing, there are places at the office but I am not required to be there as long as I have the job done. This sounds like something that falls under the category of being self-employed if I am correct? If yes, then I probably only have one concern, which is that the company would provide me with a laptop, monitors and a full home-office setup. Is that going to make the Tax authorities think that this is not truly self-employment?

 

Kindest regards,

Mike

29 januari 2023 aangepast door mike.shellhammer

[Joost Rietveld]

I can't say for sure Mike, since it's a bit of a legal grey area. That's why I urged you to at least take it up with the company in stead of assuming that's it'll be alright

[Ward van der Put]

Quote

How to avoid false self-employment
There are several things you can do to emphasise your independence and to ensure that the Tax and Customs Administration sees you as a self-employed person:

• Work for several different clients, at least three a year;
• Invoice each assignment separately;
• Invoice your clients directly;
• Document which assignments you confirm and reject;
• Invest in your own work equipment and use it in the assignments you carry out, both at home and on location.

Source: Avoid false self-employment, by the Netherlands Chamber of Commerce (KvK)

[mike.shellhammer]

12 hours ago, Joost Rietveld said:

I can't say for sure Mike, since it's a bit of a legal grey area. That's why I urged you to at least take it up with the company in stead of assuming that's it'll be alright

Ok that will be discussed with the company. Thing is that, even if the tax authorities eventually consider me as false self-employed, the consequances seem to be not really a big deal if I understand it correctly? The company would receive a fine and pay some money to the tax authorities. I would have to stop working for them and lose the right to freelancer tax benifits. That almost means no consequances for me, or I understand it totally wrong?

[Joost Rietveld]

Oh no, 

 

1. The company will most likely recover the wage taxes from you (this will almost certainly be part of the agreement between you and them).

 

2. Since you are not self employed, you don't get to deduct any expenses.

 

3. The VAT that you charged the company and paid to the tax services will not be reimbursed to you.

 

So I urge you, take care of this

[Gast Wigbolt]

Check or double check with your international office or any other advisor if you qualify for knowledge worker or any kind of exemption...

 

https://business.gov.nl/coming-to-the-netherlands/information-for-employers/permits-for-your-highly-skilled-employees/

 

...to bring this discussion and your result to a higher level.

 

BR,

 

Wigbolt

30 januari 2023 aangepast door Wigbolt

[mike.shellhammer]

On 1/30/2023 at 8:01 PM, Joost Rietveld said:

oh no, 

 

1. The company will most likely recover the wage taxes from you (this will almost certainly be part of the agreement between you and them).

 

2. Since you are not self employed, you don't get to deduct any expenses.

 

3. The VAT that you charged the company and paid to the tax services will not be reimbursed to you.

 

So I urge you, take care of this

Hi Joost,

The company agrees to use a model agreement provided by the Belastingdienst and I think that should be good for outlining the activities such that it demostrates the work relationship?

 

The problem now is that I performed a check with the Belastingdienst and even though I am truly self-emplyed, for income tax purposes I will problably not an entrepreneur. They told me that means I can't use entreepreneur deductables and have to file income tax return as "income from other work". I think that's very challenging because then I think I have to pay a lot to the government right? I mean assuming that I will make 30000 Euros in the coming year, what will my net income be then without any deductables all that? 

[Joost Rietveld]

Main deductibles you will be missing are:

Zelfstandigenaftrek: 5.303

MKB-winstvrijstelling 14% of profits after zelfstandigenaftrek.

 

On an income of 30k this means 4k in net taxes extra.

30k will leave you with 24.7k net.

[mike.shellhammer]

13 hours ago, Joost Rietveld said:

Main deductibles you will be missing are:

Zelfstandigenaftrek: 5.303

MKB-winstvrijstelling 14% of profits after zelfstandigenaftrek.

 

On an income of 30k this means 4k in net taxes extra.

30k will leave you with 24.7k net.

Hi Joost,

That's when we take into account the "algemene heffingskorting", "arbeidskorting" and Zvw contribution right?

 

[Joost Rietveld]

yes