Contractors who are businesses or self employed persons A question that is frequently asked when a contractor is hired is: Is the work carried out as a part of contractor’s business activities?
Somewhat simplified, we can say that:
If you engage a private individual, then you will in general be an employer. If you assign the assignment to an established company, then you will in general not be an employer.
Some cases fall between these extremities. You as a client are responsible for finding out whether the contractor carries out the work as a part of their business activities. The information provided by the contractor may not, however, always be sufficient. If there is any doubt about whether the person represents a business or is self employed, then you should contact the tax office in the contractor’s municipality before making any payments. The tax office can also issue a declaration of the type of income from self-employment that the contractor’s advance tax payments are based on. Only the contractor can request such a declaration.
If you in doubt, then treat the fee as salary. The tax office or tax collector’s office can also provide guidance.