August 18, 2022
On Friday, August 5, 2022 , the Executing Body of the Social and Health Insurances (“USZV”) issued a statement on its new policy regarding the Director Majority Shareholder’s (“DMS”) right to employee insurances. Employee insurances comprise the following national ordinances:
– the National Ordinance for Sickness Insurance (in Dutch: Landsverordening Ziekteverzekering)
– the National Ordinance Accident Insurance (in Dutch: Landsverordening Ongevallenverzekering) and
– the National Ordinance regarding Severance Payment (in Dutch: Cessantialandsverordening),
together hereinafter to be called Ordinances.
Insured employees within the meaning of these Ordinances are entitled to financial compensation and medical treatment by the USZV and are (partly) liable to pay the premiums due. In case of Cessantia, no premium is due by the employee, since the employer pays a fixed annual fee. Although executive board members (“EB-members”) are generally considered to be employees for employee insurance purposes, the Courts have formulated several exceptions to this general rule for situations where there is a lack of a relationship of authority (gezagsverhouding) between the employee and the employer. With this new policy, the USZV aims to consolidate these exceptions in view of transparency and clarity.
Established case law
A DMS cannot be regarded as an employee within the meaning of these Ordinances, due to a lack of a relationship of authority. More specifically, a DMS cannot be considered an employee within the meaning of these regulations if:
1. the EB-member solely, or alongside his/her spouse, holds directly or indirectly more than 50% of the shares of the company and is able to cast more than 50% of the votes at the general meeting of the company;
2. the EB-member solely, or alongside his/her spouse, and their relatives by blood and marriage up to and including the third degree, jointly hold two thirds or more of the shares of the company;
3. the EB-member, alongside his/her spouse, cannot be dismissed against their will, as an increased majority of votes is required, and this is not achievable without their consenting vote;
4. the EB-member of a company who, in addition to being an EB-member, is also a 50% shareholder of the company and cannot be dismissed against his/her will because of his/her say in the decision-making process.
What does this mean?
For DMSs who are already registered with the USZV as insured employees within the meaning of the National Ordinances for Sickness and Accident Insurances up to and including August 31 2022, the new policy does not bring about significant changes to their status and rights as insured employees within the meaning of the Ordinances until the introduction of the General Health Insurance or amendment of the applicable legislation. This group of DMSs are also able to opt for a private insurance if they wish. DMSs that choose to remain under the coverage offered by the Ordinances are still partly liable to pay the employee insurance premiums due. It is important to note that this new policy does not entail a right to a refund of the premiums paid, as DMSs are ought to have been insured whilst premiums were paid.
The new policy will be effective as of September 1, 2022. EB-members that wish to apply and/ or register with the USZV for employee insurance purposes must enclose:
– a Chamber of Commerce registration;
– a shareholder registration and
– a copy of the deed of incorporation of the company.
The USZV will determine if the application and/ or registration can be processed based on the documentation received. In case the USZV disagrees with an applicant, the applicant should consider private insurance.
Aruba and Curaçao
In the past, both Executing Bodies of the Social and Health Insurances (“SVB”) of Aruba and Curaçao have also issued communiqués announcing a similar treatment of DMSs. Unlike the USZV, both SVBs have stated that as of September 1, 2019 (Curaçao) and January 1, 2022 (Aruba), no insubordinate DMS will be considered an employee for employee insurance purposes. Thus, unlike insubordinate Sint Maarten DMSs who are already registered with the USZV, their Aruban and Curaçaoan counterparts did not have the option to remain insured for employee insurance purposes and had to consider a private insurance. The Aruban and Curaçaoan insubordinate DMSs did not have a right to a refund of the premiums paid, as they were ought to have been insured during the period in which premiums were due.
The Caribbean Netherlands
Although the applicable employee insurance legislation in The Caribbean Netherlands is nearly identical to the applicable legislation in Aruba, Sint Maarten and Curaçao, the Dutch Ministry of Social Affairs and Employment has yet to issue a communiqué announcing a similar change in policy. As the applicable
BES-legislation is nearly identical to the applicable legislation in the other jurisdictions, it is expected that the tax case law in which the exceptions for DMSs were formulated shall also become applicable for DMSs in The Caribbean Netherlands.
In case you wish to receive further information or discuss your tax position, kindly contact one of our tax advisors.
+(1721) 542 22 72
+(599-9) 73 25 400