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In the Netherlands, freelancers or self-employed professionals and their contractors need to know how their business relationship will be assessed by the Dutch Tax and Customs Administration (Belastingdienst). Is there an employer-employee relationship or not? This is an important question with regard to tax liability. Employers only have to pay payroll taxes for their employees, but not for hired freelancers/self-employed professionals under certain conditions.
Working with model agreements
Contractors/clients can ask for a model agreement (in Dutch). Model agreements were introduced under the 2016 Employment Relationships Deregulation Act (Wet deregulering beoordeling arbeidsrelaties, DBA, in Dutch). As long as the business relationship between a client/contractor and a freelancer/self-employed professional is based on a such an agreement, contractors are exempt from paying payroll taxes for this professional for this specific contract.
Types of model agreements
Freelancers/self-employed professionals and their clients can choose to work according to 3 different kinds of standard model agreements. These have been drawn up by the Dutch Tax and Customs Administration (in Dutch only):
- 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.
Model agreements are not mandatory
It is not mandatory for freelancers/self-employed professionals and their clients to work according to a model agreement. If they do not, the client is obliged to assess whether an employment relationship exists and therefore payroll taxes should be withheld. You can read more about employment relationships in chapter 1 of the Handbook for payroll taxes (in Dutch).
Enforcement of act
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) bogus 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.
When a freelancer/self-employed professional and their client choose the so-called opting-in scheme, the client is responsible for withholding and paying payroll tax and social insurance contributions for that specific contract. If so, they must notify the Dutch Tax and Customs Administration in a joint statement (in Dutch) prior to the start of the actual work.