How the DBA Act Will Affect Freelancers and Hiring Managers in the Netherlands in 2025.

Introduction

The DBA Act Netherlands (Employment Relationships Deregulation Act) was introduced to provide clarification on the relationships between employers and workers in the Netherlands. If you are a freelancer or a hiring manager, it’s essential to understand the implications of the DBA Act. In this guide, we’ll discuss how the DBA Act will impact freelancers, recruiters and employers and share tips to help those affected navigate changes and avoid penalties. 

What is the DBA Act?

The DBA Act was brought in to provide clarity to working relationship classification in the Netherlands. One of the main objectives is to prevent pseudo-self-employment. Claiming to be self-employed when you have conventional employment relationships is problematic for both freelancers (ZZP’ers) and employers. Prior to the introduction of the DAB Act, freelancers applied for a VAR from the Dutch Tax Authorities. This system was replaced in 2016. The DBA Act encourages clients (employers) and freelancers or contractors to assess the nature of the relationship. When reviewing the project or job, both parties determine whether the work involves paid employment or a freelance agreement. When the DBA Act came into force in 2016, an enforcement moratorium was confirmed, which will end in 2025. 

Upcoming changes in 2025

The DBA Act enforcement moratorium will end in January 2025. From January 1st 2025, the Dutch Tax Authorities will have the power to enforce laws, which protect against false self-employment, and impose penalties, including fines. If you are a freelancer or hiring manager, it’s critical to be aware of the upcoming changes and their implications, especially as penalties can be given in retrospect. This applies if there is a suspicion of malicious intent or the individual has failed to act on advice from the authorities. 

Implications for Freelancers

The number of freelancers in the Netherlands has increased by 85% in the last decade to over 1.5 million. The DBA Act has far-reaching implications for freelancers. Key considerations include:

• Job security: Job security has been an issue for some freelancers, as some employers were less inclined to work with freelancers when the DBA Act was introduced, due to a lack of understanding and fears about penalties. The enforcement moratorium helped alleviate pressure on employers but this will end in 2025. 

• Tax obligations: From January 2025, the Dutch Tax Authorities are expected to ramp up checks on freelancers to prevent pseudo-self-employment. Freelancers must comply with self-employment tax regulations. 

• Protection against exploitation: One of the main benefits of enforcement of the DBA Act for freelancers is protecting them from employers who expect them to do the same jobs as employers without any of the perks or benefits of traditional employment. 

Understanding rules and ZZP’ers regulations when undertaking freelance work and the implications of the DBA Act is essential for all self-employed individuals. Failure to comply with the terms of the DBA Act can result in penalties, which may include additional taxes and corrective fines. If you state that you are a freelancer and you’re actually employed, you should disclose this on your tax return. If you’re not self-employed, you won’t have access to benefits, such as self-employed tax deductions. 

Implications for Hiring Managers

Hiring managers should be aware of upcoming changes and the impact of the DBA Act on recruitment and differentiating between employees and freelancers. For recruitment agencies, employers and hiring managers, it’s crucial to draw up clear agreements and understand employment rules and regulations. If you don’t adhere to the terms, there are penalties for both employers and people who claim to be self-employed, including fines for non-compliance with DBA. 

Key steps to consider include:

• Drawing up clear agreements with freelancers

• Understanding the legal framework of the DBA Act and how it affects your business or recruitment agency

• Undertaking thorough employment relationship checks

• Working collaboratively with freelancers to establish agreements and ensure mutual compliance

• Understanding the implications of non-compliance, including fines and the requirement to pay or deduct additional fees, including social security and pension contributions and employee insurance premiums. 
  
  

Strategies for Navigating Changes

It’s not always easy to navigate changes to working relationships. To ensure compliance and foster positive relationships, here are some effective strategies:

1. Draw up clear freelancer contracts and ensure that both parties understand the terms in full

2. Manage freelance agreements proactively: Prioritise communication between hiring managers, employers and freelancers

3. Ensure both parties understand what the DBA Act means for them

4. Provide additional training or support to help those affected adjust to changes

5. Encourage open communication to build strong relationships, foster trust and create a healthy freelance culture

6. Ensure both parties understand the differences between employees and freelancers

7. Undertake regular risk assessments

8. Address issues and concerns promptly
   
   

Conclusion

The DBA Act was introduced to clarify employment relationships and self-employment laws in the Netherlands. This Act defines the distinctions between employees and freelancers, aiming to prevent pseudo-self-employment. Penalties for non-compliance apply to both freelancers and employers, making it essential for freelance workers, hiring managers, and employers to understand the rules and their responsibilities. Staying informed about regulatory changes not only reduces the risk of penalties but also supports a sustainable, healthy, and productive freelance ecosystem in the Netherlands.

With the DBA Act in place, freelance tech talent and hiring managers can rely on recruitment agencies like SGI to mediate compliant, mutually beneficial agreements during the recruitment process. This approach streamlines growth for tech companies in the Netherlands and ensures that tech hiring managers and professionals avoid fines and penalties.

If you're a tech professional based in the Netherlands or hiring tech talent for your next project, reach out to us to see how we can assist you.