This question is sometimes difficult to answer, since both options have important advantages and disadvantages. It’s often difficult for flex workers to determine the benefits and downsides of “working independently” versus “flexible working in an employment relationship”.
Here’s all of the info you need to know in order to make the right decision.
Self-employed vs employed
When you start working as a self-employed person without staff (ZZP, sole trader), the Tax and Customs Administration checks whether you are an entrepreneur and uses the following criteria:
- No authority relationship has to be in place, you need to be able to decide how you perform the work and what the rates are’
- There is no obligation to perform the work personally
- No wages are paid for example in case of illness etc.
If all three points are not in line with the actual situation, the relationship qualifies as an employment agreement.
In addition, if you are a sole trader, the Tax and Customs Administration requires you to pay VAT and income tax on your earnings. From January 1, 2020 there is a VAT exemption for small entrepreneurs. This is favorable for self-employed persons and companies who generate a maximum turnover of € 20,000 a year. On the other hand, in 2020, the total earnings threshold will be lower whereas the income tax will increase. It’s important to know that you have to take care of insurance in case you cause damages during the work.
Why work as a self-employed person?
Flexibility and higher earnings seem to be the main reasons to register as a sole trader. Additionally, the freedom to work where and when you want for the hourly rate that you want to earn sounds attractive. But as a sole trader you trade in flexibility for uncertainty, since you take more risks, you bear more responsibilities and ultimately have higher costs. A higher hourly rate does not always mean you will earn more. Keep in mind that you will have to pay for your pension, insurance for disability, liability insurance and set aside money for your holidays. You also have to pay VAT and income tax on your earnings. If you don’t do this on time or at all, the Tax Authorities will send you a payment default penalty of 3% on the amount paid late.
Advantages of flexible working
At L1NDA Connect, the hospitality flex work marketplace, we like flexibility, but at the same time we believe that security is crucial. With L1nda Connect, you combine flexibility with security, and you don’t have to choose between the two. You will find flexible work that goes with your planning, preferences, conditions and skills with a temporary employment contract for flexible work where the NBBU CAO applies. This offers many benefits which you don’t have as a self-employed person. You receive 8.33% holiday pay from the moment you work at Connect. Are you older than 21? Then you also build up pension after 26 weeks. Your social premiums are paid and lastly, no need to wait until your employer has paid, to receive your earnings. With Connect you get paid weekly. Do you have a birthday party or other engagements? You simply only apply for shifts that work for you and your schedule
Here’s how ‘working as a self-employed’ compares to ‘working flexibly at Connect’:
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