The Dutch government plans to replace the current DBA Law from 2016 with the new DBVAR Law. The new law will take effect on January 1st. 2025, and, unlike the old DBA Law, will be enforced by the Dutch government as well. The primary goal is to combat false self-employment, protect vulnerable freelancers, and ensure that taxes and social contributions are collected from individuals who are, in fact, employed by clients. However, many freelancers do not wish to be classified as employees. Many companies do not want to have staff on their payroll that they have not hired as an employee. This article outlines what parties need to do to continue executing freelance assignments as independent entrepreneurs.

Set a Minimum Hourly Rate

Firstly, as a freelancer, you must charge a minimum hourly rate of €33. If you don’t, the government will automatically classify you as an employee of the client. The government wants to prevent freelancers from earning less than the statutory minimum wage. This measure will eliminate poorly paid freelance assignments and force employers to pay regular wages, taxes, and social contributions for their employees. To be recognized as a freelancer, you must therefore invoice more than €33 per hour.

Avoid the Appearance of Employment

It’s crucial that you avoid activities that give the impression that you are employed by the client. For instance, you should not perform the same work as employees who are on the client’s payroll. Also, your tasks should not be carried out under the direct supervision of the client. This means that as a freelancer, you should not fulfil an operational role within the client’s processes. Certain roles that freelancers currently fill, such as nursing in healthcare or working in a helpdesk, may be considered false self-employment from January 1, 2025.

Complex Situations

In some cases, it is not clear whether false self-employment is an issue. For example, a carpenter who independently builds a house is not considered an employee. However, if the same carpenter works for a construction company every day, the government may likely see this as an employment relationship. If you take on work that is described in a typical job description of the client, there is a strong chance that the government will not view this as independent entrepreneurship.

Avoid Integration into the Client’s Organization

As a freelancer, you must not become part of the client’s permanent organization. Interim management roles, for example, are more likely to be considered employment, especially when temporarily replacing an internal employee.

Outcome-based Contracts and Using Your Own Resources

Moreover, it must be clear that you are genuinely working at your own risk and expense as an independent contractor. It is advisable to agree on an outcome-based contract with the client, where you determine where, how, and when the work is performed. Standard contract templates are available to help with this. Note that if you agree to be available for the client every day from 09:00 to 17:30, the government will not see this as an outcome-based contract.

You should also perform assignments using your own resources. For instance, a freelance courier should use their own delivery van, a carpenter should use their own tools, and an IT professional should use their own phone and laptop. It is also advisable to carry out the work from home or your own workspace. If you regularly use a workplace provided by the client, just like other employees, the government is likely to view you as an employee rather than a freelancer.

Exceptions and Practical Considerations

There are, however, reasonable exceptions. For instance, it is not practical for every freelance carpenter, tiler, or plasterer to bring their own crane to a construction site. It is still unclear whether the government will allow freelancers to use the client’s collaboration tools, such as MS Teams, SharePoint, Zoom, or Slack. Companies wishing to avoid any appearance of false self-employment are advised to facilitate a “Bring Your Own” approach, enabling freelancers to use their own resources to complete their work.

Maintaining Independence

As a freelancer, you must clearly operate independently. If it is not clear to third parties whether you work for the client or for yourself, the government may assume that you are an employee of the client. Companies that provide contractors with a corporate email address to access company applications should ensure it is visually indicated as an external email address.

Short Assignments as an Indicator

When your assignments are short-term and/or you work only a limited number of hours per week on a project, this strongly indicates that you are an independent entrepreneur. However, this does not mean that you cannot be an entrepreneur if your assignments are longer or full-time. You may face the risk that the government will see you as an employee in such cases.

Proving Entrepreneurship

If the government questions whether you are an entrepreneur or an employee, you must be able to prove that you run a business. This can be done by working for multiple clients, investing time and money in acquiring new assignments and investing in yourself and your business. You must be registered with the Chamber of Commerce (KvK), have a VAT number, and obtain liability insurance. Maintaining proper bookkeeping is also crucial. While it is not legally required, it is advisable to have a separate business bank account and to hire an accountant to oversee your affairs. Failing to meet these criteria does not automatically classify you as an employee. However, if it appears that you are employed by a client, the government will likely determine that you are an employee of the entity providing the work.

Foreign Freelancers and the DBVAR Law

It is important to note that the DBVAR Law will also apply to foreign freelancers who work as self-employed contractors for companies based in the Netherlands. This means that if you are a non-Dutch freelancer providing services to Dutch corporations, you will also need to comply with the requirements outlined in the DBVAR Law. This includes maintaining a minimum hourly rate, avoiding the appearance of employment, and proving your status as an independent entrepreneur. The Dutch government will assess your working relationship with the Dutch client in the same way as it does for domestic freelancers. Therefore, foreign freelancers must be aware of these regulations to ensure they are not mistakenly classified as employees, which could have significant tax and legal implications for themselves or their clients.

Future Developments

It remains to be seen how strictly the new legislation will be enforced from January 1, 2025. Many companies currently rely heavily on external personnel. This reliance is often due to the difficulty in filling vacancies. Companies, such as hospitals and schools, may face significant challenges if all these externals must be replaced by internal staff within three months. The negative social consequences of a too drastic approach by the tax authorities could be considerable, which is likely not the intent of the (other) government bodies.

Summary

The government is attempting to reduce false self-employment with the DBA Law (Assessment of Employment Relationships Deregulation). Both freelancers and their clients must work to ensure that freelance assignments are recognized by the government as entrepreneurial activities. The work performed as an independent contractor must not give the impression that you are employed by a client. If you, as a freelancer, perform work that is also done by internal employees of a client, there is a high chance that you will no longer be recognized as self-employed from January 1, 2025.

Legal Disclaimer:

The information provided in this article is for general informational purposes only. No rights may be derived from the contents of this article. While every effort has been made to ensure the accuracy of the information, it should not be considered as legal advice or relied upon as such. Always consult with a qualified professional for specific legal guidance.