Substitution-based model agreements for Dutch Freelancers will expire
Starting from January 1, 2024, freelance substitution-based model agreements will no longer hold any value for collaboration with self-employed individuals (freelancers) in The Netherlands. The Dutch Tax Authority has decided to revoke approval for this type of model agreement.
The catalyst for this policy change is the Deliveroo ruling: in March of this year, the Supreme Court upheld the decision of the Amsterdam Court of Appeal regarding Deliveroo couriers, who were incorrectly classified as self-employed. The Supreme Court formulated various "viewpoints" for assessing an employment relationship.
While the ability to be substituted by another person might suggest self-employment, the Supreme Court emphasized that this element alone does not provide certainty regarding the employment relationship. The evaluation depends on "all circumstances of the case." The substitution-based model agreements state that the contractor does not necessarily have to perform the work themselves, and therefore, no employment relationship exists. However, this does not align with the ruling: even in cases of substitution, an employment relationship could exist.
Analyzing and Incorporating the “Deliveroo Ruling” Before January 1, 2024
In addition to the general substitution-based model agreement, the industry-specific and profession-specific model agreements, as well as individual agreements based on substitution, are no longer valid. All these agreements presume that the contractor is a freelancer, given the agreement that they can be freely substituted.
While the ruling has immediate implications for employment relationship assessments, both clients and contractors have time to adjust their employment relationships if they no longer adhere to the rules. For assistance with the assessment, the Tax Authority refers to the web module on ondernemersplein.kvk.nl and the "ondernemerscheck" (entrepreneur's check). Starting from January 1, 2024, adhering to the substitution-based model agreement no longer guarantees certainty regarding the employment relationship. Industry associations and other registered applicants whose individually approved model agreements are revoked will receive a letter from the tax authorities by October 1, 2023.
Revocation Limited to Substitution-Based Model Contracts
The model agreements were introduced with the implementation of the Deregulation Assessment of Employment Relationships Act (Wet DBA). Since then, both clients and contractors have had the option to use such agreements to exclude the need for payroll taxes. The substitution-based model agreement is not the only type of model contract; there are other types as well. The tax authorities emphasize that approval for those agreements will not be revoked. Of course, it wouldn't hurt for clients and contractors to critically review their contractual arrangements and practices in light of the Deliveroo ruling. For now, there is an "enforcement moratorium," and the Tax Authority will not readily take corrective action.
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