From 1 January 2025, the Dutch Tax Authority has lifted the enforcement moratorium on employment relationships. This means the authorities will once again enforce the standard rules for addressing the misclassification of independent contractors. If misclassification is identified, corrections and retrospective tax assessments may be imposed immediately without prior warnings. However, fines will not be issued in 2025; these will come into effect from 2026 onwards. You can read more information on the Dutch Tax Authority website. 

New Law: Wet Verduidelijking Beoordeling Arbeidsrelaties en Rechtsvermoeden (VBAR)

A new law, the “Wet Verduidelijking Beoordeling Arbeidsrelaties en Rechtsvermoeden” (Act to Clarify Employment Relationships and Presumption of Employment), is set to come into force on 1 July 2025. This legislation aims to clarify when an individual is classified as an employee rather than an independent contractor. Key aspects of the law include:

• Presumption of employment: If an individual’s hourly rate is below €32.24 (as of July 2023), there will be a legal presumption of an employment contract.
• Immediate applicability: The rules will apply to all contracts entered into on or after 1 July 2025.

These changes may result in existing agreements with self-employed individuals being reclassified as employment contracts. Read more FAQ’s here.

What organisations need to do

Organisations are strongly encouraged to review their current employment relationships to ensure compliance with the forthcoming changes. Failure to comply could result in:

• Retrospective corrections: Employers may need to amend agreements retroactively to align with employment laws.
• Fines from 2026: Penalties will apply from 2026 for breaches identified after the new enforcement period begins.

To assist organisations, the Dutch Tax Authority provides model agreements and opportunities for preliminary consultations to help structure employment relationships correctly.

The 3 components of an employment contract

Employment is the default relationship between worker and the beneficiary of the work under Dutch law. An employment relation consists of three components:

• Authority: The work is done under the direction and supervision of an employer;
• Personal work: The work cannot or may not equally be done by another person;
• Wages: Volunteering or internships are not included.

If these conditions are met, an employment relation exists, and an employment contract is deemed to have formed. Whether an actual contract has been signed, or what the ‘will of the parties’ is does not matter. The employment relationship and employment contract arise by operation of law, driven by the nature of the employment relationship.

Working as an independent contractor 

A contractor (also called a contract worker, independent contractor, or freelancer), is a self-employed worker who operates independently on a contractual basis. They are their own boss. This means that a contractor is not an employee; but instead, they run their own entity such as a sole proprietorship (in Dutch it is called “een eenmanszaak”) or a limited liability company (“een besloten vennootschap” in Dutch) and are contracted out by organizations to work on particular projects or assignments.

Their contract relationships can be short- or long-term, but there is always a large degree of independence. They can also do work for multiple companies at the same time. The flexibility over different assignments and the financial control are two factors that make contracting very interesting.

The pros of contracting

• Freedom to take on assignments to your liking
• Freedom of working multiple assignments at the same time
• Freedom to choose short- or long-term engagements
• Total control over the price of your services
• Tax-exempt to a certain annual amount (until 2027)

The cons when contracting

• Responsibility for paying taxes to the tax authorities 
• Responsibility to organize your own pension 
• Responsibility to organize income during sick holidays, sickness, end of an assignment
• Responsibility to ‘run your business’ (website, marketing, investing etc.) 

In the end, Dutch authorities are supportive of professionals who want to work engagements under their own management and risk, but only if the worker is truly an independent professional.

Beware of a case of misclassification

The Dutch authorities are very concerned with contractor relationships where the professional is insufficiently independent. Such misclassification is seen as exploitation and regulated heavily.  

Even when the contract speaks of an engagement of an independent professional, if the actual working situation and relationship has too many characteristics of employment, the authorities will impose all employment-related regulations retroactively (employment tax, working hours, pension contributions etc.).

One of the most important ways of generating too much dependence is spending too much time on a single client. As a rule-of-thumb, if you spend more than 6 months (almost) exclusively on one assignment, the relationship may be classified as employment.

Other criteria are more subjective. E.g. the level of independence in the day-to-day activities, the degree of supervision and the practical possibility of having the work performed by a subcontractor.

Read more about this topic:

• Contractors / ZZP in the Netherlands
• How to avoid Misclassification in the Netherlands
• Freelance as an expat in the Netherlands
• In Dutch: Schijnzelfstandigheid bij ZZP’ers
• In Dutch: Verkapt dienstverband (for employers that use freelancers)

Dutch Employer of Record is here to help independent contractors

In the evolving work arena of independent contractors in the Netherlands, Dutch Employer of Record, the specialized Employer of Record in the Netherlands stands as a crucial ally, aiding contractors and companies navigating shifting regulations. For contractors, it offers guidance through Dutch employment intricacies, while also simplifying business establishment. Collaborating with Dutch Employer of Record ensures compliance, minimizes misclassification risks, and maximizes contracting benefits in an evolving work landscape.