New mandatory disability insurance (AOV) proposal expected end of 2025

The goal of the mandatory AOV is to help entrepreneurs if they fall ill or become disabled for work for a longer period of time. Disability insurance has been in place for several years for employees, but not for entrepreneurs.  The precise details of the law and the moment the AOV becomes mandatory have not been fixed yet. The government expects to have a new legislative proposal ready by the end of 2025. 

Although it is not certain how the new proposal will differ from the 2024 one, it is reasonable to assume that the main points will be similar. So what can you expect? This article lists the outlines in the 2024 proposal for the Basisverzekering arbeidsongeschiktheid zelfstandigen (BAZ, in Dutch). 

AOV for entrepreneurs

With an AOV, entrepreneurs insure themselves against loss of income due to illness or incapacity for work. This is currently not mandatory. The 2024 proposal states that the AOV will become mandatory for self-employed professionals who are considered entrepreneurs for income tax by the Netherlands Tax Administration (in Dutch). 

Many self-employed people do not have an occupational disability insurance policy (in Dutch). Some of them have other solutions to reduce the financial risk in case of incapacity for work.

The proposed premium for mandatory AOV

The 2024 proposal states that you must have an AOV if you have profits from your business for income tax purposes. An AOV is not compulsory for collaborating spouses. If you are still active as an entrepreneur after you reach the state pension age, you do not have to pay premiums. However, if you do not pay, you are not entitled to benefits either. This is in the proposal.

The proposed annual premium amounts to circa 6.5% of the taxable profit from your business, including the SME profit exemption and the entrepreneur allowance. Per month, the entrepreneur pays a maximum of about €195 for the AOV. That amount is based on the 2024 minimum wage. You pay the premiums to the Tax Administration. You can deduct the amount from your profits. The premium itself is taxed. 

Mandatory AOV benefits

The 2024 bill proposed that UWV would start paying invalidity benefits after 1year of illness. This benefit would then continue until you reach the AOW pension age. You are entitled to a benefit if, due to an illness or disability, you are no longer able to earn an amount at least equal to the minimum wage.

The amount of the benefit is 70% of the taxable profit. That amount is at most equal to the minimum wage. This is different from employees. There, the last earned wage is taken into account.

Opt-out of mandatory AOV

Another stipulation from the 2024 proposal was that self-employed people who already have private disability insurance would be able to continue to use it. Entrepreneurs who find the mandatory AOV insufficient or prefer private insurance would also be able to make use of a so-called opt-out.

Such private insurance would have to meet a number of conditions. For instance, the premium must be at least equal to that of the mandatory AOV. Also, the amount of the disability benefit must not be lower than that of the mandatory AOV. The private disability insurance must also continue until the state pension age.

A transitional right would apply to existing insurance policies.