If you work as a freelancer or as a self-employed professional, you may have heard of the term bogus self-employment. You are registered as an entrepreneur, but in practice you work for a boss. It is a situation the Dutch government wants to avoid.
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Bogus self-employed professionals are people who are registered as entrepreneurs in the Dutch Commercial Register (Handelsregister), but who actually exercise a professional activity under the authority of an employer. There are two situations in which this can happen:
- Some employers will offer you a job on condition that you register with the KVK and become a self-employed professional (zelfstandige zonder personeel, zzp’er). They then hire you as a zzp’er instead of employing you. By hiring you as a zzp’er, the company does not need to pay social security premiums or payroll taxes, or keep records of hiring you as an employee. You will not receive payment when you are sick; you are not entitled to paid holidays. Nor are you protected against dismissal; you do not build up pension rights. You need to pay your own social premiums. Your employer has no obligations towards you.
- The other situation is when you really are a self-employed professional and you are hired by a company for a certain job. However, one or more of the following conditions also apply:
- your client determines how you do the assignment; they have the authority;
- you have committed to doing the job yourself, you cannot send someone else;
- you receive a salary from the client, a fixed wage per month, or even when you are sick.
The Tax Administration will assess the situation as one of employment rather than independent entrepreneurship.
Real zzp’ers are in charge of their own business: you decide when and how you work and whether you perform the work yourself or outsource it. If you only have one client, occupy a desk in their office and follow instructions on how to do your job, you are in danger of slipping into the grey area of bogus self-employment. Check if you are employed on the Tax Administration website (in Dutch).
Employment competitionThe Dutch government is currently making plans to put bogus self-employment to an end, as it causes employment competition. Because clients do not have to pay zzp’ers employee insurance premiums, it may be more attractive to hire a zzp’er than an employee. In addition, as a self-employed professional, you have more tax benefits. This uneven playing field between the self-employed and employees can result in fewer people being hired or employees having less favourable working conditions. Also, as there is no minimum wage for zzp’ers, you may end up earning too little to make ends meet.
If the Tax and Customs Administration sees malicious intent, your client may receive a fine and will need to pay social security premiums retroactively. You as a zzp’er will need to stop working for them, and will lose your right to tax benefits such as the private business ownership allowance and SME profit exemption.
How to avoid bogus self-employmentThere are several things you can do to emphasise your independence and to ensure that the Tax and Customs Administration sees you as a self-employed person:
- Work for several different clients, at least three a year;
- Invoice each assignment separately;
- Invoice your clients directly;
- Document which assignments you confirm and reject;
- Invest in your own work equipment and use it in the assignments you carry out, both at home and on location.
Make sure that the Tax Administration sees you as an entrepreneur for income tax. You might be an entrepreneur one year, and not be one the next. The Dutch Tax and Customs Administration has devised the OndernemersCheck , an online tool (in Dutch) to help you find out whether you are likely to be assessed an entrepreneur or not. When in doubt, consult with a fiscal service provider, or with the Dutch Tax and Customs Administration.
Another important measure to avoid bogus self-employment is the use of a model agreement from the tax authorities. You and your client record your working relationship in such a model agreement. It does mean that you must then work according to what has been agreed and recorded in that document. The model agreements are part of the Deregulation Assessment of Employment Relations Act (deregulering beoordeling arbeidsrelatie, DBA Act, in Dutch). A model agreement can help, especially in situations where it is not immediately clear whether there is salaried employment. The step-by-step plan explains what to do if you want to use a model contract. You can also search for a model agreement. You can adjust a model agreement of the tax administration yourself. But your modifications must not conflict with the yellow-marked provisions of the model agreement. You can also draw up your own agreement and have it assessed by the tax authorities.
Not available in English
Please note that the Tax Administration model agreements are only available in Dutch. Your sector organisation or zzp interest group may be able to help you find an English translation, but your Dutch client will most likely prefer the signed contract to be in Dutch.
Online tool for clients
The Dutch Ministry of Social Affairs and Employment has launched a pilot with an online tool that entrepreneurs can use to find out if an assignment can be performed by an employee or by a zzp’er. The Webmodule Beoordeling Arbeidsrelatie (only in Dutch) consists of a number of questions to determine if the assignment calls for hiring an independent agent or not.