If you work as freelancer or entrepreneur (self-employed) in the Netherlands, you might have heard about false self-employment (in Dutch: schijnzelfstandigheid). The Dutch government has announced that they want to put an end to this. Currently, the Dutch tax office is almost not enforcing false self-employment; the plan is to strengthen supervision by 2025 at the latest. There must be clearer rules about whether you are seen as an employee or a self-employed professional (zzp). This will create a fairer playing field between employees and the self-employed.
What is false self-employment?
False self-employment, also known as bogus self-employment or disguised salaried employment, actually means that it looks like you are a self-employed person, but according to the tax authorities, you are not. Not sure if you are seen as a false self-employed person? If you answer yes to all the questions below, you are in false self-employment:
- Are you obliged to do the job yourself?
- Does the client determine how you carry out the assignment?
- Do you receive a fixed compensation, even in the event of illness?
What is the problem of false self-employment?
What is the reason that the government is concerned about false self-employment? The problem is that there is no fair playing field in employment law and tax treatment. This problem has two sides:
- In the case of self-employment, the employer does not have to pay wage tax and national insurance contributions.
- As an entrepreneur, you are entitled to entrepreneur deductions (the biggest is the self-employed deduction). In the case of false self-employment, you are wrongly seen as an entrepreneur, and you can use these deductible items. As a result, you pay less income tax than you are supposed to.
As you can read above, the tax authorities receive less tax money due to false self-employment. Therefore, they will take a stricter approach to this.
Prevent false self-employment
The chance of being caught with false self-employment is currently very low because there is practically no enforcement unless you are malicious. If the Dutch tax authorities see you as a false self-employed person, this has consequences for you and your employer.
Consequences for self-employed:
- Correction obligation or additional assessments
- Loss of tax deductions (self-employed person deduction, SME profit exemption, etc.)
Consequences for the client (employer):
- Payment of employer social insurance contributions, often with retroactive effect
- Often a fine
- The false self-employed person must stop immediately unless there is an employment contract
How to avoid false self-employment?
There are some actions that you can take to make sure you are seen as an entrepreneur by the Dutch tax office:
- Work for more than 3 clients per year
- Wait 6 months before you start working for your old employer
- Invest in your company (e.g., the tools you need to perform your job)
- Send invoices yourself and separately per assignment
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