Enforcement of rules until 1 January 2025

Until 1 January 2025, the rules are only enforced if the tax authorities deem that the company has malicious intent. This is the case if the company deliberately allows a situation of apparent false self-employment to arise or to continue because the company knows or should have known that there is in fact an employment relationship. In that case, the tax authorities can impose correction obligations or additional assessments on the company. To be able to do so, they have to prove three things:

• A (real or deemed) employment relationship
• Obvious false self-employment
• Intentional false self-employment

If an investigation by the tax authorities shows that there is a (real or deemed) employment relationship, but no malicious intent exists, the authorities will not enforce the law just yet. Instead, they will give instructions. The company then needs to comply with these instructions to:

• Shape the employment relationship in such a way that it can be qualified as working outside employment; or
• Report the relationship as an employment relationship in the Dutch wage tax returns.

The company is usually given three months to comply. If the tax authorities determine after this period that the company has not followed their instructions, or has not followed them sufficiently, while there is still a (real or deemed) employment relationship, the tax authorities can enforce the law. In the above-mentioned cases, the tax authorities can impose correction obligations and additional assessments, possibly including fines, penalties and interest.

Enforcement of rules as of 1 January 2025

However, recently, the Dutch government has stated that starting 1 January 2025, the rules against false self-employment will fully and actively be enforced. As per that date, the tax authorities can impose correction obligations, additional assessments, fines, penalties and interest if they determine during an audit, for example, that there is in fact an employment relationship. In doing so, they will not look back further than 1 January 2025, unless there is malicious intent or failure to comply with their instructions. Additionally, there will be a transition period of one year, during which employers and contingent workers should not receive a penalty if they can prove that they are taking steps to combat false self-employment.

As the current rules remain somewhat unclear, the Dutch government is also currently working on new legislation to provide more clarity in this respect. In the meantime, the tax authorities have in this context also proactively shared additional guidance (which mostly is in Dutch) for employers via its website containing additional information and online tools to assist with analyzing employment relationships. Please note that this guidance does not provide any certainty.

Adopted motions for a 'smoother' transition to the enforcement of rules

In addition, on 1 October 2024, several motions were adopted with the aim to facilitate a smoother transition to the upcoming enforcement of the rules. State Secretary for Tax Affairs and the Tax Administration of the Netherlands have promised to seriously consider the motions that were adopted, such as:

• A primary focus on severe cases of false employment during the first year of the new rules' enforcement.
• Facilitating the further use of model agreements (whereas it was initially stated that these would be discontinued) and preliminary consultations of employment relationships.
• Publishing a clear framework for hiring employees on the Dutch tax authority's website by 1 November 2024 and requiring all ministries to use this framework when hiring self-employed persons.
• Ceasing the hiring of self-employed persons in the central government.
• To apply a human approach when enforcing the rules if necessary.

Key takeaways

The enforcement of the rules effective from 1 January 2025 highlights the importance for Dutch employers to conduct a proper analysis of the actual facts and circumstances of their relationships with self-employed personnel from a Dutch wage tax and social security perspective, and to seek advice on legal compliance where needed. Additionally, we emphasize the importance for organizations to seek integrated tax, legal, and pension advice to effectively manage all associated risks. This is a suitable moment to address these aspects, as the qualification of the employment relationship may trigger corresponding risks and challenges in each of these fields. The following key takeaways are therefore advised:

• Companies should review their flexible working pool to ensure compliance and a future-proof workforce.
• It is crucial to assess and address any instances of false self-employment within the organization and to take adequate actions to minimize risks by amending the working relationship or the method of hiring.
• Implementing risk mitigation measures and establishing or reviewing controls for monitoring and testing false self-employment are essential steps to prepare for the upcoming enforcement changes.

If you have any questions about how these developments may affect your workforce, please feel free to reach out to Mirjam de Blécourt, Maarten Hoelen and Danielle Pinedo.