The Dutch government has unveiled a package of new rules and tough enforcement measures for self-employed workers. These new regulations aim to address the issue of schijnzelfstandigheid (false self-employment), where individuals are classified as self-employed but effectively work under conditions akin to traditional employment. While the government’s intention is to create a fairer labour market, the impact on genuine self-employed professionals, and the wider economy, has been profound.
Honourable intentions
The crux of the new rules lies in the end of the enforcement moratorium on the Deregulation of Labour Relations Assessment Act (Wet DBA). This moratorium had previously limited the Dutch Tax Office’s ability to enforce rules against false self-employment.
With its conclusion, the Tax Office (Belastingdienst) now has the power to impose correction obligations, additional assessments, fines and interest, to be paid by the employer (i.e., the self-employed person’s client), without first issuing a warning to rectify the contractual relationship. The government’s official announcement proclaims companies and organisations engaging individuals as self-employed workers for tasks performed under significant client control risk penalties and additional tax assessments.
Knock-on effects
The implementation of these measures has raised serious concerns among self-employed professionals. Many fear the stricter enforcement will result in the loss of contracts, as companies become increasingly wary of engaging self-employed workers due to the potential risks of penalties.
The Confederation of Netherlands Trade Unions (CNV) has emphasised the importance of understanding these new rules. They stress that both clients and self-employed workers must familiarise themselves with the criteria distinguishing genuine self-employment from false self-employment to ensure compliance and avoid penalties.
Procedural obstacles
One of the primary challenges posed by the new regulations is the ambiguity in distinguishing between genuine self-employment and false self-employment. The criteria for determining the nature of the working relationship can be complex, creating uncertainty for both clients and self-employed individuals. This uncertainty may deter companies from hiring self-employed workers altogether, opting instead for permanent employees to mitigate compliance risks.
Another significant issue is the cessation of the approval of model agreements by the Tax Office, which previously served as a tool for businesses and self-employed professionals to ensure compliance. While the government has stated existing model agreements will remain valid until their expiration dates, no new agreements will be approved. As a result, businesses and workers must now rely more heavily on independent assessments and legal advice to determine the nature of their working relationships.
Economic consequences
Not all self-employed people welcome the new rules, even if they are meant to protect their interests. Danielle van Wieringen, representing the Committee for Self-Employed Professionals (Comité ZZP), argues that self-employed individuals are key to driving innovation, flexibility and resilience in the Dutch economy, and their contributions should be celebrated rather than discouraged.
The stricter enforcement measures have far-reaching implications for the Dutch economy. Self-employed professionals play a vital role across various sectors, offering specialised skills and flexibility which benefit businesses and contribute to economic dynamism. The potential reduction in the use of self-employed workers could stifle innovation and adaptability in industries that have traditionally relied on this workforce segment.
Additionally, the increased administrative burden on businesses to assess and document the nature of their engagements with self-employed workers may lead to higher operational costs. These costs could be passed on to consumers or result in reduced competitiveness for Dutch companies, particularly small and medium-sized enterprises that may lack the resources to navigate this regulatory shift effectively.
What’s next?
There has been something of a ‘vibe shift’ around economic and fiscal policy in Europe in recent months. With new governments in Britain and the US making a renewed push for economic growth, European leaders including Polish prime minister Donald Tusk have made clear their concern that Europe’s global competitiveness is slipping.
The impact of new tax rules on self-employed workers in the Netherlands will only add fuel to the fire. A consensus is slowly building that Europe needs to do more to reduce state interference in business through complicated new rules and taxes, keeping procedures streamlined to lessen the burden on entrepreneurs and pave the way for economic growth.
Written by Jason Reed