Netherlands: Tax Authority to Enforce Regulations on False Self-employment Starting in 2025
The implementation of the Clarification of Assessment of Employment Relations and Legal Presumption Act (abbreviated as VBAR in Dutch) will be postponed. As mentioned in our previous tracker, we promised to keep you informed regarding this development. Despite the postponement, the Tax Authority will begin actively enforcing the regulations on false self-employment from 1 January 2025. This was established in a letter to Parliament dated 20 June 2024, where the Secretary of State for Taxation and the Tax Administration addressed questions regarding the enforcement moratorium.
Tax authorities will enforce it despite the postponement of legislation
In the progress report for December 2022, the Dutch government highlighted that in numerous cases, the engagement of independent workers fails to meet legal standards and regulations. The Enforcement Plan for Employment Relations outlines the following three-tier system to tackle false self-employment:
- Creating a more level playing field for contract forms for employees and the self-employed.
- Clarifying the rules on when to work as an employee and when to be self-employed.
- Strengthening and improving enforcement in preparation for abolishing the enforcement moratorium by 1 January 2025.
As indicated in last month’s tracker, the law on clarifying the assessment of employment relationships and the legal presumption (tier 2) will be postponed until 2026. The Secretary of State stated that progress on one tier is not dependent on the others. For this reason, it has been decided to lift the moratorium on enforcement before the specific legislation comes into force.
Consequences of the lifting of the Enforcement Moratorium
The Tax Administration’s enforcement moratorium means that there is temporarily no enforcement on the qualification of the employment relationship with clients, unless there is malice or a designation.
With the lifting of the enforcement moratorium, as of 1 January 2025, the Tax Authorities will no longer limit themselves to giving a warning in the case of an incorrect classification of an employment relationship. Starting from that date, the Tax Authorities can impose correction obligations and additional assessments in all cases. In certain cases, a fine may also be imposed starting from 1 January 2025.
At the key action points presented below, you will find a list of factors to consider when determining whether someone is classified as an independent worker or an employee
Key Action Points for Human Resources and In-House Counsel:
- Provide a detailed exposition on how independent workers are deployed: which tasks are assigned to independent workers, how do they manage their work hours, what is the method of determining compensation, how is it paid, and who determines their schedule?
- Contractual Engagement: Determine if contractors work with multiple clients and the duration of their service contracts.
- Entrepreneurial status: Assess if contractors bear commercial risk and operate as entrepreneurs in the market.
- Task Clarity and Documentation: Define tasks clearly and document them in service contracts.
- Autonomy Assessment: Regularly evaluate contractor autonomy levels.
