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Do you work as a freelancer or self-employed professional for 1 or more clients? Or are you the client of a self-employed professional? In the Netherlands clients and contractors need to assess their work relationship. They have to establish that their agreement is not a form of employment. This requirement stems from the Employment Relationships Deregulation Act (Wet deregulering beoordeling arbeidsrelaties, wet DBA).
Please note: in 2016 the DBA act was implemented to bring more clarity in client-contractor relations. This change in law has not proved effective enough. New legislation is pending, but it is not yet known when these rules will come into effect.
Preventing false self-employment
Contractor and client need to assess together if their business arrangement is in fact an employment relationship or not (in Dutch). Employers only have to pay payroll taxes for their employees, but not for hired freelancers/self-employed professionals under certain conditions. If you accept an assignment as a self-employed professional or freelancer and it turns out to be a type of employment, this is called false self-employment or disguised employment. In this situation your client is actually your employer but he does not pay the taxes he should pay for employees (payroll taxes) and you cannot make use of specific tax benefits.
You must make sure you avoid false self-employment. The responsibility for this lies with both client and contractor.
Enforcement of the act (wet DBA)
The Dutch Tax and Customs Administration performs checks (in Dutch) to establish whether or not there is in fact an employer-employee relationship at play. The Tax and Customs Administration can impose corrective fines or taxes where they establish malicious intent with regard to fictitious self-employment or (obvious or deliberate) false self-employment constructions. They may also do so when a contractor/client fails to comply with instructions, for instance to make changes in the set-up of the employer-employee relationship.
Clients and contractors may use a model agreement (in Dutch) to make sure their business relationship is not (seen as) false self-employment.
Freelancers/self-employed professionals and their clients can choose to work according to 3 different kinds of standard model agreements (in Dutch only). These have been drawn up by the Dutch Tax and Customs Administration:
- General model agreements (in Dutch): these model agreements cover most business relationships which do not involve employment.
- Sector or profession-specific model agreements (in Dutch): these agreements are meant for everyone working according to certain sectoral or professional standards or conditions.
- Individual model agreements (in Dutch): these agreements have been drawn up by a specific sector of profession, anyone working in the same sector or profession may use them.
If you do not want to use one of these model agreements, you and your client can always draw up one yourselves and have it assessed (in Dutch) by the Dutch Tax and Customs Administration.