Background
The DBA Act was introduced in 2016 with the aim to combat pseudo self-employment. However, the introduction of the DBA Act led to much commotion and discussion because the rules regarding working with self-employed individuals were not clear enough. To alleviate the commotion, the enforcement moratorium was established shortly after the introduction of the DBA Act in 2016. On the basis of this enforcement moratorium, the Dutch tax authorities could not retroactively rectify the qualification of the labor relationship for wage tax purposes, except in cases of malicious intent.
Parliamentary Letter of 6 September 2024
In the Parliamentary Letter of 6 September 2024, the government announced its intention to improve the balance in the labor market and to make working with and as self-employed individual(s) more future-proof. The government aims to achieve this through three main pillars:
- Pillar 1: Creating a better level playing field between different types of contracts.
- Pillar 2: Improving the functioning of the Dutch labor market, including providing more clarity on when work is performed as an employee or as a self-employed individual.
- Pillar 3: Enhancing enforcement against pseudo self-employment.
The termination of the enforcement moratorium as of 1 January 2025 is an important aspect of Pillar 3.
No hysterical audits as of 1 January 2025
During the Round Table Discussion on 5 September 2024, the Dutch tax authorities expressed their intention to not increase the strictness of its enforcement measures. Currently, there are 80 FTE’s combatting pseudo self-employment, and this number will remain the same. The current legislation and case law remain leading, with the Dutch tax authorities adopting a holistic approach to assess labor relationships. The Dutch tax authorities emphasizes that it will only act as an enforcer and is dependent on developments in legislation and regulations.
On 12 September 2024, the Committee for Social Affairs and Employment and the Committee for Finance debated the termination of the enforcement moratorium as of 1 January 2025. During the committee debate, several members of the House of Representatives advocated for postponing enforcement until the new legislation concerning self-employed individuals enters into effect. However, the State Secretary for Tax Affairs and Tax Administration (State Secretary) emphasized that the lifting of the enforcement moratorium cannot be further delayed in order to ensure legal certainty and legal trust. Many organizations and companies have already made preparations to align their business operations with legislation and regulations.
Moreover, several members of the House of Representatives argued to maintain the option for the Dutch tax authorities to issue instructions to the principals (opdrachtgevers) to adjust the labor relationships. The State Secretary indicated a desire to actively enforce but also mentioned that the Dutch tax authorities would remain reserved in certain situations, and may still issue instructions to the principal to adjust the labor relationship. According to the State Secretary, no hysterical audits will take place as of 1 January 2025.
Model agreements
In the Parliamentary Letter of 6 September 2024, it was announced that the model agreements will be phased out as of 1 January 2025, because they do not align with the principles formulated by the Dutch Supreme Court stating that all circumstances of the case must be assessed (ECLI:NL:HR:1997:ZC2495).
As of 6 September 2024, the Dutch tax authorities also terminated assessing new model agreements. The current approved model agreements will remain valid until the approval end date, provided that the work is actually carried out as agreed in the model agreement. The general model agreement ‘no employer authority’ will remain valid at least until 1 June 2026.
The government has decided to terminate assessing new model agreements to prevent these agreements from providing a false sense of certainty. In the Deliveroo judgement (ECLI:NL:HR:2023:443), Deliveroo used a general model agreement ‘no employer authority’ with the possibility of free substitution, upon which the Supreme Court ultimately ruled that it was in fact an employment agreement. This led to the withdrawal of the model agreement ‘unrestricted substitution’ as of 1 January 2024. Whether an employment relationship exists can only be determined during the course of and at the end of the labor relationship based on all facts and circumstances in their entirety. This is also known as the holistic approach. Since this assessment takes place at the end, no prior certainty can be given based on an approved model agreement.
Relevance for practice
The termination of the enforcement moratorium as of 1 January 2025, has the following consequences:
- Normal Enforcement Rules: The normal rules for enforcing the qualification of labor relationships will be applicable again for imposing correction obligations, additional tax assessments, and fines. However, there will be a transition period of one year during which no penalties will be imposed, provided that it can be demonstrated that steps have been taken against pseudo self-employment.
- Focus on Principals: The focus within the enforcement of labor relationships will be on the principals (opdrachtgevers).
- Corrections with Retrospective Effect: The previous enforcement moratorium will be taken into consideration, meaning that corrections with retrospective effect will only be imposed up until 1 January 2025. For the period before 1 January 2025, the Dutch tax authorities can only impose corrections within the five-year term in cases of malicious intent or insufficient compliance with previously issued instructions.
Next steps
The Act of clarification of assessment of employment relationships and legal presumption (Wet VBAR) is currently being reviewed by the Council of State and is expected to be implemented on 1 January 2026. This creates uncertainty and ambiguity, as the enforcement moratorium will be lifted on 1 January 2025.
We advise you to (re-)assess all the labor relationships with self-employed individuals before 1 January 2025 in order to determine whether they can continue working as self-employed individuals. Of course, we are happy to assist you with this.
After reading this news item, do you need further clarification on the potential consequences? Or are you interested in a no-obligation consultation? If so, please contact your Loyens & Loeff adviser or one of our tax advisers from our Employment & Benefits team. We will be happy to assist you.
