Are you truly a freelancer or actually an employee?
From January 1, 2025, the Dutch Tax Authority will enforce stricter rules regarding the Assessment of Employment Relationships Act (DBA Law). This law is designed to clarify the relationship between clients and freelancers. The goal is to prevent false self-employment, where someone is hired as a freelancer but effectively works as an employee without the associated rights and obligations. The difference between a freelancer and an employee can sometimes be difficult to determine, but there are clear characteristics that can help you identify which category you belong to.
Characteristics of a freelance assignment
If you are a true freelancer, you have the freedom and risks associated with independent entrepreneurship. These are some characteristics of an assignment that aligns with being self-employed:
- Decide how and when you work
You determine how you execute the work and when your working hours are. The client may only specify the desired end result, not how you achieve it. - Entrepreneurial Behavior
You position yourself as an entrepreneur, for example by managing your own website, actively acquiring customers, and handling multiple projects simultaneously. - Higher compensation
The pay is usually higher than what employees in the same sector receive. This is because you handle your own taxes, insurance, and other costs. - Entrepreneurial Behavior
You profile yourself as an entrepreneur, for example by managing your own website, actively acquiring customers, and performing multiple tasks simultaneously. - Taking Entrepreneurial Risks
You are responsible for investments in your work (such as tools or software) and bear the risk if a project falls through or fails.
Characteristics of employment
If you work as a freelancer but your situation matches the following characteristics, there’s a risk the Tax Authority may consider your working relationship as an employment contract:
- Long-term Collaboration
You work for the same client for an extended period, which may indicate dependence on a single customer. - Tasks similar to employees
If you perform the same tasks as employees in salaried positions, it’s less likely to qualify as a freelance assignment. - Structural tasks within the organization
You carry out tasks that are a permanent part of the organization, such as teaching at a school or building at a construction company. - Personal obligation to work
You are required to do the work yourself and may only be replaced with the client’s permission. - Minimal risk and no investments
The client bears most of the risks and costs. As a freelancer, you make little to no investments or bear any entrepreneurial risks.
The Deliveroo case: What does it mean?
The Deliveroo case ruled by the Dutch Supreme Court demonstrates that not only the agreements on paper but also the actual practice are key for assessment. Important questions arising from this case include:
- How much freedom do you have in determining your working hours and methods?
- Are you a structural part of the organization?
- Do you truly bear entrepreneurial risks?
Even if a contract states you are self-employed, the Tax Authority can conclude that you are an employee if the practice shows otherwise. This ruling emphasizes that how you work is more important than what is stated on paper.
Sectors with the highest risk
Certain sectors have a higher risk of false self-employment. This is because freelancers often work under conditions that resemble employment. The following sectors are considered high-risk:
- Construction
Many freelancers here work alongside employees, making the line between self-employment and employment contracts blur. - Transport and logistics
Drivers and couriers often work under strict instructions and schedules, resembling an employer-employee relationship. - Cleaning
Freelancers often work at fixed times and locations, similar to employees. - Agriculture and horticulture
Seasonal workers perform tasks that are often structural and resemble employment. - Security
In this sector, working hours and methods are often strictly regulated, which can obscure self-employment.
Are you active in one of these sectors? Then it’s extra important to ensure that your self-employment is clearly demonstrated through your agreements and practices.
Why is this important?
If the Tax Authority determines that you are effectively an employee and not a freelancer, it has consequences for both you and your client:
- For you as a freelancer:
- You may lose tax benefits, such as the self-employment deduction.
- You might need to repay taxes and social security contributions.
- Your reputation as a freelancer could be damaged.
- For the client:
- They may still need to pay payroll taxes and social security contributions.
- They could face fines for incorrectly assessing the employment relationship.
What can you do to avoid problems?
- Review your situation:
Check the characteristics of your working relationship. Does your work meet the conditions for self-employment, or does it resemble employment? Tip: Use the information on the government’s website to check: Rijksoverheid – Aanpak schijnconstructies. - Make clear agreements:
Create a solid contract stating that you work as a freelancer. Ensure the actual execution aligns with what the contract specifies. - Act as an entrepreneur:
Be visibly self-employed. Have multiple clients, maintain your own website, and invest in your business. - Seek advice:
Unsure about your situation? Get advice from an accountant or legal expert. They can help you structure your working relationships properly.
In summary
The DBA Law and Deliveroo ruling help determine whether you are truly self-employed or effectively an employee. If you work in high-risk sectors, such as construction, transportation, or cleaning, it is especially important to check whether your situation complies with the rules for self-employment. Use the government’s tool to determine where you stand and avoid problems. This way, you can work carefree as an entrepreneur and protect yourself and your client!
