Chain liability when subcontracting in refrigeration engineering

As a refrigeration engineering company you often hire self-employed contractors or subcontractors to absorb peaks in workload or to outsource specialist work — think of a welding job or a CO inspection. What many main contractors don't realise: if your subcontractor doesn't pay its payroll taxes or underpays its staff, you yourself can be held liable for that. That's called chain liability, and it actually consists of two separate schemes that are often confused with each other.

Two schemes under one umbrella term

• Tax chain liability (payroll taxes). Set out in article 35 of the Invorderingswet 1990 (the basic variant for hiring in staff is in article 34). This scheme makes (sub)contractors jointly and severally liable for the payroll taxes a subcontractor owes on the work carried out for you (source: Belastingdienst (opent in nieuw tabblad)). VAT runs through a different mechanism (the reverse-charge mechanism and, for staff hire, the hirer's liability of art. 34 IW) — not through this article 35.
• Civil-law chain liability for wages. Since 1 July 2015, articles 7:616a up to and including 7:616f of the Burgerlijk Wetboek provide that an employee who receives too little wages can hold not only their own employer but also the clients further up the chain jointly and severally liable for the outstanding wages. This provision was introduced via the Wet Aanpak Schijnconstructies (WAS) (source: bill 34108, Eerste Kamer (opent in nieuw tabblad)).

Both schemes essentially apply to "work of a material nature" — a tangible result, such as an installation, pipework or a maintenance job — which places the refrigeration engineering and installation sector squarely within their scope.

The g-rekening: limiting risk when hiring subcontractors

To limit the tax risk, a subcontractor can open a blocked account: the g-rekening. As the main contractor, you pay part of the invoice amount directly into that account instead of into your subcontractor's regular account. The subcontractor may only use that amount to pay payroll taxes. If you pay the correct amount into the g-rekening, you are exempt from liability (disculpatie) for that — even if your subcontractor later goes bankrupt or fails to pay the taxes (source: Belastingdienst (opent in nieuw tabblad)).

An important limitation: a g-rekening can only be opened by a subcontractor with staff, in other words with a payroll tax number. For a self-employed contractor without staff, the Belastingdienst will not cooperate in opening a g-rekening — not even if you, as the main contractor, wanted that (source: Belastingdienst). For most self-employed subcontractors in refrigeration engineering, the g-rekening is therefore not an option.

Trade organisation SNA (Stichting Normering Arbeid), together with the Belastingdienst, applies guideline percentages for payments into the g-rekening — generally lower for SNA-registered companies than for unregistered ones. Because these percentages can change and can differ per situation: check the current percentage with normeringarbeid.nl (opent in nieuw tabblad) or your bookkeeper before you set a payment amount, instead of relying on a percentage you read somewhere.

Working with self-employed contractors without a g-rekening

Because a g-rekening is usually not possible for self-employed contractors, the tax risk for them partly falls away — but the civil-law chain liability for wages (art. 7:616a BW) remains relevant as soon as that self-employed contractor in turn brings in staff or other self-employed contractors without you being aware of it. In practice this means due diligence is your most important tool:

• Check the subcontractor's KvK registration before you assign a job.
• Ask for an SNA registration (based on the NEN 4400 standard) if the subcontractor works with staff.
• Record in the agreement who is responsible for what, including the certificate that the technician who actually carries out the work needs — for example the F-gas personal certificate for refrigerant work.
• Keep invoices, KvK extracts and any SNA statements per job in your records, so that in the event of an inspection you can demonstrate that you acted with due care.

What to do if you already work with subcontractors

Have you long been used to engaging self-employed contractors or subcontractors without putting these agreements in writing? Then don't assume everything is fine just because nothing has gone wrong yet. Check whether your current subcontractors have a valid KvK registration and, where relevant, an SNA registration, and ask your bookkeeper or accountant to determine together with you whether a g-rekening arrangement makes sense for your specific subcontractors. If you are in doubt about the tax consequences of a specific collaboration, this is typically a question for your bookkeeper or the Belastingdienst itself, not something to decide by feel.

Further reading

• Applying for an F-gas certificate: the complete route
• VCA toolbox meeting: also mandatory for subcontractors?
• What does work order software cost for a refrigeration engineering company

Disclaimer: This article describes the main lines of chain liability and the Wet Aanpak Schijnconstructies based on information from the Belastingdienst and the legislative history. Percentages for g-rekening payments and the precise tax consequences are bespoke and can change. Ask for specific tax and employment-law advice via /contact or your bookkeeper before drawing up a subcontractor agreement.