A lot of digital ink has been spilled on the new DBA law in the Netherlands, which was supposed to replace the VAR and regulate the use of self-employed individuals by the clients.

Any self-employed professional should be able to demonstrate that he is not the client’s employee.

This is an important matter because any qualification as a ‘deemed’ employee comes with major financial consequences.

The client is then deemed to be the employer and required to remit all applicable payroll taxes. If the client fails to comply with remittance requirements, then supplementary tax assessments with interest and possibly penalties too, may follow.

The VAR system (VAR: Statement of Employment Relationship) provided security in the past, until the 1st of May 2016, when the VAR was replaced by the Assessment of Employment Relationships (Deregulation) Act (DBA). The DBA legislation required the use of model agreements published by the Tax and Customs Administration which were intended to clarify the status of the freelancer as either an independent business owner or an employee. In practice it became clear that this approach did not work and the DBA legislation caused a great deal of uncertainty and concern. Clients stopped using the services of real freelancers and independent contractors, out of fear that the latter might be considered as their (disguised) employees. As a result, it was decided to suspend the enforcement of the DBA legislation, initially until 1 January 2018. This period was then extended to 1 July 2018. This transition period of indemnification from supplementary assessment with penalties does not apply in clear cases of ‘malicious intent’.

There was another bill put forward prior to the DBA legislation. This was the Exemption from Payroll Tax Withholding (Implementation) Act (BGL). This bill failed to be adopted. It envisaged using a web module – based on the British example – to apply for a decision stating that the self-employed person was not an employee on the basis of which the client would be indemnified from the withholding and remittance of all payroll taxes. Based on the plans of the government, it is likely that the principle behind the BGL legislation will be back on the table.

It is believed that the new bill will be submitted to parliament during the course of 2018 and possibly enter into force as of the 1st of January 2019. Following the introduction of the new legislation the tax authorities will pursue a policy of limited enforcement (i.e. no penalties further to a first inspection) and adopt mainly a coaching role. This is intended to help the parties involved with the application of the new legislation. This transition period is essentially a further extension of the present period in which the Tax and Customs Administration has not been enforcing the Assessment of Employment Relationships (Deregulation) Act (DBA) – except in cases of ‘malicious intent’.

Based on the Rutte III Coalition Agreement the new legislation will take the following form in outline:


Where self-employed people work for a low hourly rate and for a longer contract period (more than three months), or in combination with performing regular business activities, then they will always be deemed as working on the basis of an employment contract. An hourly rate of less than €15 is considered to be low.


Where a high hourly rate applies (more than €75 per hour) together with a shorter contract period (less than a year) or in combination with not performing regular business activities, then the self-employed person may be excluded from the payroll tax regime (opt out).


A ‘client statement’ will be introduced for self-employed people charging more than the low rate. This will provide the hiring party with clarity and certainty when contracting the services of self-employed professionals and contractors. The client will be issued with this statement after completing the web module. This client statement will indemnify the client by providing certainty in advance that payroll tax and employee insurance contributions do not have to be withheld and remitted (unless the questions in the web module have not been answered truthfully). This client statement essentially works in the same way as the previous concept th:at formed part of the Exemption from Payroll Tax Withholding (Implementation) Act (BGL).

Independent contractors can be incorporated into the Dutch Civil Code through the introduction of an entrepreneurship agreement. This could help to clarify and strengthen the position of independents.

There are some difficulties in implementing any relevant regulation though. There is a need for a distinction between performing work which either is or is not part of the client’s normal business activities. In practice, this distinction is debatable. At the same time, there will be a classification of the self-employed for tax purposes into 1) real independents charging a high hourly rate; 2) the self-employed on a low hourly rate, that will be deemed to be employed; and 3) an in-between category. This three-way division still fails to determine whether or not the contract is one of employment under civil law.

In the Rutte III Coalition Agreement the government has announced that the new legislation will include a transition period of no more than a year. During this period – provided you are not considered of malicious intent – you need not fear the imposition of supplementary assessment with interest and penalties.

We will have to wait until the new bill is submitted to parliament and what statutory provision is ultimately published in the Bulletin of Acts and Decrees. It is strongly advisable to examine your present contracts with freelancers – and particularly the duration and nature of the work (regular and other business activities) – in the light of the anticipated new legislation. It has been announced that a distinction will be made between contracts shorter or longer than three months (for regular business activities) and shorter or longer than a year (for other activities). Where necessary you may conclude an agreement to provide services with your self-employed contractors, possibly based on one of the model contracts published by the Tax and Customs Administration. These agreements to provide services must exclude the use of any form of employment.

We will keep you posted, until then, follow us on Linkedin to keep abreast of the developments.