(a) No.

(b) No.

(c) No. However, if the specific activities of the workers fall under the scope of a compulsory order for participation of a compulsory Dutch industry-wide pension fund, this may lead to an obligation for the company to affiliate with and pay pension contributions to this pension fund, by law.

(a) No.

(b) No, however, if a standard contract ("model agreement") has previously been concluded and is still valid, such agreement can be used to provide certainty as to whether a relationship constitutes an employment relationship. Please note that the use of model agreements will be discontinued going forward (see below). Furthermore, Dutch tax law generally offers the possibility to approach the Dutch tax authorities proactively and to request them to provide their formal opinion as to whether a relationship constitutes an employment relationship in a so-called ruling.

(c) No.

Under the Dutch Deregulation of Labor Relations Act (DBA), principals and contractors jointly assess whether their relationship constitutes an employment relationship. In case of doubt, a so-called model agreement (see below) may provide certainty if it was previously concluded and is currently still valid. It is important to assess whether an employment relationship exists. In such case, the employer must withhold, remit and pay wage tax and (if applicable) social security premiums.

Real employment

Under Dutch employment and wage tax law, an employment relationship has three characteristics: (1) an employer's authority; (2) a personal obligation to work; and (3) the payment of wages. If all three characteristics are met, a (real) employment relationship is deemed to exist. To perform this analysis, all relevant circumstances need to be considered. In a landmark employment law case, the Dutch Supreme Court clarified the circumstances that are relevant for assessing whether an employment relationship exists for the purpose of Dutch employment law, as follows:

• The nature and duration of the work
• The manner in which the work and working hours are determined
• The embedding of the work and the person performing the work in the organization and business operations of the person for whom the work is performed
• The existence or absence of an obligation to perform the work personally
• The manner in which the contractual arrangement of the relationship between the parties has been established
• The manner in which the remuneration is determined and how it is paid
• The amount of the remuneration
• Whether the person performing the work bears commercial risk in doing so
• Whether the person performing the work behaves or can behave as an entrepreneur in economic transactions

While the circumstances mentioned above derive from an employment law-related case, such cases are, in principle, also relevant for the Dutch wage tax and social security qualification of an employment relationship. As such, we are already seeing lower fiscal courts applying the same principles when making their decisions.

Deemed employment

An employment relationship may also exist if there are certain so-called "deemed employment" relationships, which are specifically identified by law.

The following employment relationships are currently considered deemed employment relationships for all Dutch payroll taxes: contractors of work and their assistants, agents and subagents; directors of cooperatives with employee self-management; executive directors of listed companies with a one-tier board and all directors of listed companies with a two-tier board (This only applies to agreements between directors and listed companies that were entered into from 1 January 2013. If the agreement was entered into before 2013, there is a real employment relationship.); so-called equivalent workers (gelijkgestelden); students and trainees; sex workers working for an operator; home workers and their assistants; top athletes with an A-status from NOC*NSF; and temporary workers.

For Dutch wage tax/national insurance contributions and the income-related Zvw contribution, deemed employment relationships also exist with: (partners of) shareholders having a so-called substantial interest (aanmerkelijk belang) unless they already have a real employment relationship; cooperating children; and pseudo-employees who have "opted into" a real employment relationship.

Model agreements

If one or more of the three characteristics for a real employment relationship are missing, and there is also no deemed employment relationship under the law, no further employment relationship is usually considered to exist. However, uncertainty can still arise in any number of situations in practice. Therefore, the Dutch tax authorities published so-called model agreements on their website for situations in which one or more characteristics of an employment relationship are missing.

When the parties used these model agreements and work was carried out in accordance with the content of the agreements, under the current system, both parties could, in principle, derive certainty from the agreement that an employment relationship would not exist.

However, the Dutch government recently announced that the tax authorities will no longer approve these model agreements as of 6 September 2024, since the use of these agreements is no longer tenable. According to the government, such agreements cannot provide any certainty in advance on working outside of an employment relationship, as this depends on how the work is carried out in practice, and not on what is stated in any contract. However, the current model agreements will still be honored until the end date of the agreements.

More information about model agreements can be found here (in Dutch only).

Web module

With a view to creating more clarity on whether an employment relationship exists, in January 2021, the Dutch government introduced a pilot for a web module. This pilot ended in July 2021, but it is still accessible online and can be found here (in Dutch only). The decision on whether to introduce the web module formally, and whether it will be given legal status, is still to be made. However, the previous Dutch government has announced its intention to invest more funds into this project to develop the module further.

As the Dutch government agrees that the current rules do not provide enough certainty to determine whether an employment relationship exists, it intends to implement new rules in the (near) future, replacing the current DBA. As such, two draft legislative proposals were recently published and submitted for online consultations. However, this draft legislation has been received quite critically by practitioners, scholars, etc., and its future is, therefore, uncertain.

Enforcement of rules until 1 January 2025

Given the uncertainty under the current rules, the Dutch government has stated that until 1 January 2025, those rules will only be 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. The tax authorities can then impose correction obligations or additional assessments on the company. To be able to do so, they have to prove three things:

1. A real or deemed employment relationship
2. Obvious false self-employment
3. 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 do this. 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 Dutch tax authorities can impose correction obligations and additional assessments, possibly including fines, penalties and interest. Before enforcing, the tax authorities will always carry out an investigation. This can, for example, start with a company visit and culminate in a wage tax audit.

Enforcement of rules as of 1 January 2025

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.

Platform work

The EU directive on platform workers, which was adopted by the European Parliament in early 2024, seeks to improve the working conditions of individuals performing work for a digital labor platform. Broadly, the directive provides that an individual working for a digital labor platform will be presumed to be its employee where facts indicating control and direction are present. For more information, please see our client alert here.

The main risks are as follows:

• Misclassification as a result of which the contingent worker may, for example, have the right to continued payment of wages in the event of sickness, paid holidays and the protection against dismissal
• Payment of national insurance contributions if the contingent worker is qualified as an employee and is insured on the basis of the social insurance schemes for employees under the Sickness Benefits Act (ZW), Work and Income (Capacity for Work) Act (WIA), and Unemployment Insurance Act (WW)

There are no penalties from an employment law perspective.

The main risks are as follows:

• There is a risk of reclassification as employment by the Dutch tax authorities, leading to liability for lack of (timely) withholding and remittance of wage tax and social security contributions due and for failing to (timely) file the correct wage tax returns (including fines/penalties and interest due on this amount).
• The company may also be required to reclaim wage tax and social security contributions not withheld from the pseudo-contractor (or, alternatively, gross up any fees paid for wage tax purposes).

The consequences are administrative fines at fixed amounts (or at percentages of the total amount of wage tax and social security contributions due, up to a maximum amount) and/or penalties up to 100% of the amount of the wage tax and social security contributions that have not been (or have not been timely) withheld and remitted, if and insofar as the failure to pay was caused by a willful act (opzet) or gross negligence (grove schuld), plus interest due on this amount.

The main risks are as follows:

• There is a risk of reclassification as employment by Dutch tax authorities, leading to liability for lack of (timely) withholding and remittance of wage tax and social security contributions due and for failing to (timely) file the correct wage tax returns (including fines/penalties and interest due on this amount).
• The company may also be required to reclaim wage tax and social security contributions not withheld from the pseudo-contractor (or, alternatively, gross up any fees paid for wage tax purposes).
• There is also a risk of lack of benefit entitlement in the event of illness, incapacity for work, unemployment, etc. of the contingent workers.

The consequences are administrative fines at fixed amounts (or at percentages of the total amount of wage tax and social security contributions due, up to a maximum amount) and/or penalties up to 100% of the amount of the wage tax and social security contributions that have not been (or have not been timely) withheld and remitted, if and insofar as the failure to pay was caused by a willful act (opzet) or gross negligence (grove schuld), plus interest due on this amount.

The main risks are as follows:

• Misclassification could lead to a company being in breach of its registration and payment obligation under a compulsory industry-wide pension scheme or a company pension scheme.
• There would be liability to pay compensation for missed partner pension under a company pension scheme after the contingent worker dies.

If, as a result of a misclassification, the company is found to be in breach of its registration and payment obligation under a compulsory industry-wide pension scheme or a company pension scheme, the following maximum penalties could apply:

Liability for retroactive claims for backdated pension contributions and/or damages: The amount will depend on the number of employees involved, the particular pension scheme that the employer has or should have in place, and the number of retroactive years that are considered. The amount would include the employer contributions and, potentially, the employee contributions and interest. On average, a contribution level of 24% of the "pensionable base" (pensionable salary minus threshold for state pension, e.g., EUR 50,000) applies for compulsory industry-wide pension funds, of which on average two-thirds is paid by the employer and one-third by the employee. If a large group has been misclassified over a long period, the amounts can be very significant. Compulsory industry-wide pension funds can also levy the amounts due by means of a writ of execution, if the contribution payments are not made after an official notification by registered mail. In that case and under conditions, managing directors can be held jointly and severally liable for the contributions.

Instead of the penalty system, criminal charges can be brought against, for example, the company director or the employee in question in certain cases of fraud.

Instead of the penalty system, criminal charges can be brought against, for example, the company director or the employee in question in certain cases of fraud. Generally, the risk of criminal sanctions occurring is medium.

This is a combined risk rating across all areas, including likelihood of challenge, impact of challenge and uncertainty of law.