Dutch Tax administration shares new guidelines to assess employment relations: what does it mean for you?

Since November 1, 2024, the Tax Administration has been using a renewed decision and consideration framework for assessing employment relationships. This framework should bring clarity to the sometimes foggy border areas between employment and self-employment. For both principals and contractors it is essential to understand the new rules of the game: it not only helps to correctly qualify employment relationships, but also to avoid financial surprises regarding payroll taxes.

What is the new balancing framework?

The new consideration framework zooms in on the core of exactly what a working relationship means under the law. It revolves around three classic pillars: authority, labor, and wages - as described in Civil Code Article 7:610. In short, an employment relationship involves a relationship in which the employee works under the direction and supervision of the employer, in which work is performed and wages are paid in return. The consideration framework provides clear criteria to put these elements in context.

It doesn't stop there. A "holistic test" has also been created: a broader view that considers all relevant facts and circumstances. This ensures a balanced judgment on the nature of the working relationship, focusing not only on formal agreements but also on day-to-day practice.

How does the assessment work?

According to previous Supreme Court case law, the assessment proceeds in two steps:

1. The explanation phase: This stage looks at the intent and interpretation of the agreements between the two parties. Not only what is written down on paper, but also how both parties perceive and comply with the agreements is addressed here.

2. The qualification phase: Once the agreements are explained, the assessment of whether they correspond to the characteristics of an employment relationship follows. Important at this stage is how the arrangements translate into practice - because deviations in implementation can affect the classification of the relationship.

The 9 Criteria from the Deliveroo Judgment

In order to provide even more structure, the Supreme Court formulated nine criteria in the so-called Deliveroo judgment that help to sharply assess the nature of an employment relationship. These criteria are included in the balancing framework and provide a solid foundation for determining the employment relationship. Some of the key points are:

• Type and duration of work: Simple and long-term work may be more likely to indicate an employment relationship.
• Flexibility in working hours and methods: The more freedom the contractor has, the more it looks like self-employment.
• Embedded in the organization: Working at the client's location and participating in business activities indicates employment.
• Personal performance obligation: If there is an obligation to perform the work personally, without replacement, this often indicates an employment contract.
• Leeway to negotiate at the conclusion of the contract: Little room for negotiation can be a sign of employment.
• Rewage structure and payment method: Self-billing and negotiating pay indicates self-employment.
• Comparability of pay: Pay similar to that of employees may suggest employment.
• Commercial risk: Does the contractor bear the risk himself? This is more likely to suggest self-employment.
• Entrepreneurship: The more clearly the contractor presents himself as an entrepreneur, the more likely he is to be self-employed.

Assessment Tools: The Web Module

For those who want to know immediately whether an employment relationship could be considered employment, there is the Webmodule Assessment of Employment Relationship. This online tool, located at Ondernemersplein, provides an initial indication based on the data entered and integrates the criteria from the consideration framework.

What does this mean for clients and contractors?

The new assessment framework offers concrete tools for the correct qualification of labor relations, but also requires care and a conscious approach. By using the Web module and delving into the nine criteria, employers and self-employed persons can clearly determine together whether their working relationship meets the requirements.

The approach of NXTminds: WetDBA start scan and interim scan

At NXTminds we were involved early on in the introduction of this new consideration framework. The Tax Authorities and BOVIB, the trade association for independent and quality intermediaries and brokers, informed us in time about the impact and implementation. On this basis, we developed the WetDBA start scan. This scan tests against the criteria of the consideration framework and is applied to every assignment and freelancer we broker.

In addition, we perform an interim scan during the assignment. This allows us to test any changes in the assignment or working method for DBA compliance. This way we reduce uncertainty and deliver extra value as an intermediary: we give our clients and contractors the assurance that they can work together with peace of mind within the legal frameworks.

Conclusion

This new consideration framework offers a welcome step toward greater transparency in labor relations. It not only reduces the chance of misunderstandings, but also reduces the risk of legal problems surrounding employment relationships. At NXTminds we are ready, with our WetDBA start-up scan and interim scans, to support our partners and offer them certainty and confidence in their employment relationships.