Netherlands: Preparing for the End of the Dutch Enforcement Moratorium by Ensuring Proper Employment Classification by 2025

The letter addresses the lifting of the enforcement moratorium on 1 January 2025. This moratorium, introduced in 2016, provided time for organizations to adapt to new rules without immediate enforcement by the Dutch Tax Authority. It aimed to address false self-employment, where individuals are hired as freelancers but should legally be classified as employees.

Starting 2025, the Tax Authority will actively enforce the correct classification of employment relationships, focusing primarily on payroll taxes owed by clients or companies. Corrections will only apply retroactively on 1 January 2025. For the period before this date, corrections can only be imposed in cases of bad faith or if previous instructions by the Tax Authority were not followed, with a maximum retroactive period of five years.

The Tax Authority will assess employment relationships based on key factors such as control, regular payment, and the requirement to perform work personally. They will focus on the practical reality of the working relationship rather than solely on the contracts. A holistic approach will be taken, weighing all relevant circumstances, and recent court rulings, such as the Deliveroo case, will be considered.

Organizations can demonstrate that they are working to correctly classify employment relationships by collaborating with the Tax Authority, using shared examples, adjusting their contracts and operational procedures, and developing decision-making frameworks. This will help prevent the misclassification of workers who should be treated as employees.

The government will offer supporting measures, including public communication campaigns and sector-specific collaboration. The Tax Authority will be lenient in the first year after lifting the moratorium for organizations that show clear efforts to comply and reduce false self-employment, which highlights the importance of early preparation.

Key points HR:

• Starting 1 January 2025, the Tax Authority will enforce employment classification with a focus on payroll taxes.
• Only retroactive corrections in January 2025 will apply, unless there has been bad faith or ignored instructions.
• The assessment focuses on control, personal work obligations, and actual working conditions, not just contracts.
• Demonstrating proactive compliance, such as adjusting contracts and engaging with the Tax Authority, will help prevent penalties, especially in the first year when leniency is expected.