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Netherlands: The Ministry of Social Affairs and Employment Clarifies Approach to False Self-Employment and the Tax Authorities Will Resume Enforcement

The (now caretaker) government announced on 16 December 2022 that it would clarify the rules on the assessment of employment relationships and reduce the grey area between employees and self-employed workers. On 12 July this year, in response to parliamentary questions, the Ministry provided further clarity on the plans in this area.

It is primarily the responsibility of employers (both clients and employers) and contractors to determine whether an employment contract exists or if work can be performed outside of an employment relationship. The Ministry states that the draft legislation which is being prepared will provide more clarity for the parties involved, the tax authorities, and the courts to determine whether self-employment or employment is involved. Entrepreneurship will be considered as a contraindication for the existence of an employment relationship, especially when work is performed at own account and risk. The Ministry further addresses inquiries regarding the embedding criterion. This criterion states that if the work is organisationally embedded in the core business of the company, the “relationship of authority” criterion is met. It is important to note that this criterion is already utilised as circumstance that should be considered in the assessment of whether there is an employment contract, such as the Supreme Court ruling regarding Deliveroo, as well as in case law from the European Court of Justice.

Finally, the Ministry emphasises the role that the tax authorities will play in addressing false self-employment. In recent years, the tax authorities have not performed any checks to determine whether an assignment contract is in fact an employment relationship. The Ministry has previously indicated that the tax authorities will resume the enforcement of the law. The Ministry now confirms that this will indeed happen, and preparations are being made for full enforcement by 1 January 2025 at the latest.

Key Action Points for Human Resources and In-house Counsel

  • Prepare for enforcement measures by the tax authorities;
  • If an assignment agreement is intended, ensure that there is no embedding of the work in the organisation and make sure entrepreneurship is clearly present; and
  • If you are in any doubt as to whether a relationship of employment or self-employment exists, contact one of our expert attorneys for assistance.