The one client is no client solution. The creative persons referring to themselves as tax advisors have plenty of solutions. But are these solutions or shuffling the problem hoping it is not seen?
One client is no client solution – what is the issue?
The one client is not client issue is, that the client is not a client. The moment you have one client only for whom you spend all the time in your company, it is not a client. This person is your employer. That is the problem.
Some say that there is no difference between employment and working ZZP with one client. In both cases the income tax is being paid. The income tax is a small part of the issue. The true issue are the employee social premiums.
The employee social premiums
The employee social premiums such as unemployment and disability premium are not paid outside employment. The undermining of the social system by deemed employment has become too huge. The deemed employment is that you act identical to how an employee acts, but you are not paid a salary. You are invoicing.
The income tax difference employment versus one client
An employee has no deductions in the income tax return. The entrepreneur has some deductions, as the thought in the past was that not the full profit can be taxed. The entrepreneurs should be able to have some untaxed income to set aside for the rainy day. Hence the entrepreneur discount and small business discount.
The penalty for acting as self employed?
The penalty for acting as self employed while you only have one full time client is simple. The relationship is seen as deemed employment. The rule is than all you receive from your employer is taxed. You received the payment of the invoice including VAT. That payment is seen as gross salary.
This payment is grossed up with wage tax and social premiums. We expect a 50% penalty. That is charged to your ‘client’ the deemed employer. The tax office normally goes back maximum for a five year period. The court cases we have read about these type of corrections, often caused the ‘employer’ to go bankrupt, as this amount of tax and wage tax payments were simply too much.
The one client is no client solution – bad solution
The now offered creative solutions by tax advisors on occasion are multiple. Make a group of one client entrepreneurs, do as if you are a corporate and then the corporate has multiple clients. The tax office will look easily through such a scheme, even if that is done via VOF, foundation, or what have you.
The BV company incorporation where you continue to service your one client, but then via the BV is also not working. The heart of the issue are the employee social premiums. The director shareholder of the BV does earn a salary, but due to his special position, no employee social premiums are being paid. The tax office announced this conversion into a BV still working for one client is not accepted.
The one client is no client solution – tax office
The solution the tax office offers is very simple. Realize this rule applies to your situation. Discuss the issue with your client/employer and act. If your ‘employer’ is not willing to work with you (the entrepreneur), then the problem in case of an audit is indeed only for the ‘ employer’.
If you make the change, the past situation that was not correct as well, is not challenged by the tax office, is what we understand.
The one client is no client solution: tax is exciting
In our opinion it can be even easier to solve the issue: become a true entrepreneur! Find more clients, become diversify in your clientele. Indeed, you cannot work for multiple clients 40 hours a week. Have you realized that one day maybe your one client no longer needs your services? That at the end of the month you learn you are no longer needed? No unemployment benefit for you. Then suddenly you need to find other clients.
Hence we have the opinion you should find more clients now already. Adjust the hours you work for the client enabling you to get more contracts. You might even find it more joyfull as helping multiple companies out with a short contract is very much appreciated.
Tax is exciting
We think tax is exciting. Working for one client only we experience more as a challenge than this being exciting. Not only is there a risk every single day the contract is not extended. But actually you are not the entrepreneur in the sense of the description of the word entrepreneur.
The entrepreneur is active providing a service, finding clients. Consequently having entrepreneurs tax questions for us. Processing the bookkeeping and trying not to pay too much tax. The deemed employer has none of that. Every month the same amount is invoiced and the adagio is to spend nearly no costs, as it cannot yield new clients. Not exciting at all.
