Heads-up: there has been an update on this subject. The Dutch Tax authority has taken mitigating measures, softening the blow from enforcement in 2025.
As of January 1, 2025, the Dutch tax authority will fully enforce on pseudo self-employment. For every client who works with freelancers and where the freelancer can actually be considered an employee, this enforcement on false self-employment can have major legal and tax consequences.
What is pseudo self-employment?
Pseudo self-employment means that a contractor is formally regarded as self-employed, but in practice works under circumstances that are more similar to an employment contract. This can be the case, for example, if the contractor works side-by-side with your own employees and has little control over his prices, working hours and the way he should perform the work.
With pseudo self-employment, actual independence is often lacking, such as own investments, own acquisition, multiple clients or bearing (financial) entrepreneurial risk. This can lead to disguised employment, where the employment relationship meets the legal characteristics of an employment contract.
Risks in pseudo self-employment
The tax authorities play an important role in the assessment of pseudo self-employment. They look whether the criteria for an employment contract are actually met, namely authority, personal work and a (fixed) payment. The agreements you have made with the self-employed person, for example that no employment is intended, are therefore not decisive.
If false self-employment is established, the tax authority can hold both the client and the self-employed person liable. This often leads to retroactive levies of payroll tax and social security contributions, as well as possible fines.
In addition, the self-employed can successfully claim the rights of an employee, such as dismissal protection and continued payment of wages during illness.
For clients, the financial and legal consequences are significant, which emphasizes the importance of carefully assessing the employment relationship.
“VBAR” Act
The case law surrounding pseudo self-employment has been evolving in recent years. More test criteria are determined and more and more often conclusions are drawn that there is an employment contract, regardless of contracts to the contrary.
These developments have led to the legislative bill Verduidelijking Beoordeling Arbeidsrelaties en Rechtsvermoeden (VBAR), which will (possibly) take effect on January first, 2026.
Practical consequences
Although the VBAR Act is not yet in place, the tax authority is drawing its own plan. As of January first, 2025 the Dutch tax authority will fully enforce on pseudo self-employment. This means that all organizations (companies, but also governments and health care institutions) that employ self-employed workers for work that should actually be done as employees, can expect fines and additional taxes up to a maximum of 5 years back.
Relevant to note is that the lifting of the enforcement moratorium has no retroactive effect. The tax authorities will not check for employment relationships that were not properly qualified before January first, 2025 (barring malicious situations).
Furthermore, there will be a transition period of one year during which clients will not yet be fined if they demonstrate that they are taking measures against false self-employment. Think for example of processes aimed at reducing the number of abusive self-employed relationships or converting these self-employed relationships into employment.
Advice: check your pseudo self-employed
As a result of the lifting of the enforcement moratorium, as of January 1 2025, you will be at immediate risk if assignment relationships with self-employed persons in practice contain characteristics of an employment relationship. It is therefore important to take action now and take stock of your collaborations with self-employed persons and adjust them where necessary and possible.
We would like to give you a step-by-step plan to check the collaborations and take measures:
1) Make an inventory of all people working for your organization on the basis of a contract of assignment, including positions (core, staff or “company alien”), nature, scope and duration of the assignment and rate agreements;
2) Assess for each self-employed person what contractual arrangements have been made, whether they are being followed, and to what extent the self-employed person is integrated into your organization;
3) Assess the degree of entrepreneurship of the self-employed person, such as what financial risks does he run when performing the assignment and does he work for multiple clients;
4) Act on conclusions, engage with your freelancers and maintain the relationship as self-employed, hire through an agency or reform to employee;
5) Adjust your contracts. You can use current model agreements from the tax authority for now, but be aware that these model agreements are limited in content. Crucial topics such as liability, specifically if it is judged that there is a disguised employment relationship, are missing in them. In view of the new legislation, it is also better not to conclude assignment agreements with self-employed persons for an indefinite period of time.
Would you like to know more about the upcoming enforcement by the tax authorities? Expertise in 18 legal fields enables La Gro to offer broad legal assistance. Feel free to contact Angela van der Does-Mekes en Gerard Zuidgeest or one of our other specialist colleagues.
