Do you (regularly) borrow personnel or do you outsource work of a material nature? Then you can be held jointly and severally liable for the unpaid/overdue wage tax and sales tax of your hirer respectively (sub)contractor.
Employee and chain liability
When hiring staff you have to deal with the hirer's liability and when outsourcing work of material nature you have to deal with the chain liability. Within payroll taxes, both hirer and chain liability apply. Within the turnover tax, however, chain liability does not apply, but the VAT due is transferred to the (sub)contractor. Turnover tax does have the hirer's liability.
Protective measures for recipients and chain liability
You can take various measures to test the reliability of your hirer or (sub)contractor or to protect yourself against liability. The most important measure that indemnifies you from any liability is depositing a part of the invoice (20% - 40%) in a blocked G account of the hirer. The account holder can only spend the balance of the G account to pay payroll taxes and sales tax. Before you hire personnel or outsource work of a material nature, we advise you to additionally investigate who you lender or (sub)contractor is. Consider, for example:
- Perform Waadi check on the hiring party/(sub)contractor via website KvK.
- Requesting a Statement of Payment History from the hirer/(sub)contractor.
- Keep proper records of the person you are hiring or outsourcing work to. Keeping proper records prevents the Tax Office from determining the payroll tax due based on the anonymous rate.
VAT reverse charge on work of a material nature
As we noted above, as a starting point, the hirer's liability also applies to VAT. However, special rules apply if you hire personnel who are deployed under your direction and supervision to perform work of a material nature with respect to real estate. In that case, the lender must issue you an invoice without VAT as a starting point. In that case, the lender applies the VAT reverse charge mechanism, as a result of which you as hirer must pay the VAT due on your VAT return (you can deduct it again, assuming fully VAT-taxed services). Incidentally, in certain cases another 'exception to this exception' may apply.
The above mentioned (protection) measures and exceptions do not make the hirer and chain liability for the practice easier. When in doubt, always consult a tax advisor.