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Dutch Law DBA – The Purpose, the Consequences and the (in)securities


Now that the proposed Deregulation Assessment Working Relations Act (DBA) has passed Parliament the VAR Certificate has become a relic from the past.

In more than 10 years of its existence, clients who hired contractors who were in possession of a VAR-wuo or VAR-dga, were protected against any possible PAYE liability (tax and social security contributions). If it turned out that the contractor was in fact to be considered an employee of the client, the financial consequences were entirely for the account of the contractor, whereas the client remained protected. This unlimited protection no doubt played an important role in the significant increase of flexible labour we have seen over the last few years.

However, presumed abuse by fake self-employed contractors caused politicians to call for an adjustment of the system. The VAR Certificate was issued based on assumed future facts and circumstances. Even though these facts and circumstances in practice often turned out to be different, because of the unlimited protection of the client, actual application of the relevant legislation proved to be difficult.

DBA has become effective as of 1st May 2016 however there was a ‘transition period’ up until Jan 2018. During the transition period both the client and the contractor had an obligation to make sure that the working relationship, where necessary, was transformed in such a way that it met with the new legislation. The Dutch authorities, even during the transition, made it clear that penalties would apply for any company that breaches the new rules.

Implementation of the DBA rules has now been pushed back to Jan 1st 2020, however as with the transition period up until now, companies seen to be in breach of the proposed DBA rules will be subject to fines and the liability of back taxes.

The new DBA Act intends to offer certainty to both the client and the contractor about the classification of the working relationship, focusing on the relationship the ‘End User’ client has with the temporary worker. When a self-employed setup is being looked at the new legislation must be considered and then, when secure in the knowledge that you are the right side of the new DBA rules, a Model Agreement can be issued. Model Agreements are official contracts used for self-employed engagements and are sent off by the contracting party (company who is engaging with the contractor) to be approved by the Dutch Government. As a member of Bovib (Brancheorganisatie voor intermediairs en brokers) TCP has been deeply involved in drafting an industry specific agreements for intermediaries that were sent to the Dutch authorities for their approval. By using this agreement, as well as carrying out the relevant due diligence for the placement of contractors with our clients, we are managing the risks that can arise from this kind of placement.


What are the authorities focusing on when assessing Employed / Self-Employed?

The elements to be taken into account when assessing the working relationship are linked to the criteria for employment, these being primarily (but not limited to) 1) does the client have authority over the contractor, 2) is the contractor tied to this one client 3) is the contractor providing their own equipment.

In order to be classified as self-employed it is important that the agreements between parties contain the following clauses or clauses of similar meaning:

  • The contractor accepts full responsibility for the correct performance of the work. He will be liable for any damage relating to his performance and will indemnify the client against all claims for compensation.
  • The contractor plans and performs the work independently. He does not come under the management and control of the client. The client neither gives instructions nor imposes regulations relating to presentation, interaction with the client’s competitors or other clients, working hours and corporate identity by means of a corporate dress code, logos on company vehicles and business cards.
  •  The contractor takes care of his own tools, equipment and training.
  •  The contractor is working for a number of different clients at the same time. Has several sources of income

If the agreement contains these or similar clauses it will very likely be approved by the Authorities. Should the work indeed be performed in accordance with these clauses the working relationship cannot be classified as employment and the client cannot be held liable for PAYE.

However, should the work not be performed in accordance with the clauses in the Model Agreement the authorities could still claim employment, causing the client to be liable for PAYE. In such a situation employment can only be assessed retrospectively.

The role of the intermediary

As the focus is on the relationship between the End User Client and the contractor, the risks and liability can sit entirely with the client. The role of an intermediary like TCP in this case can be used to help manage the risks involved.

By using TCP’s Model agreement, as well as carefully carrying out the necessary back office due diligence, TCP can ensure the compliance of the placement from start to finish and so manage the risk to the End User client.


The risks involved when placing a self-employed contractor on site with your client are essentially related to ‘Deemed Employment’. If the Dutch Tax and Customs Administration suspect that DBA is being deliberately ignored in any way then they will look to assign a party as the employer, subject that party to retrospective tax and social security as well as apply penalties/fines. As the worker/contractor is on site with the End User Client they are certainly at most risk.

Model Agreements can help manage this risk however, simply having a Model Agreement in place is not enough. DBA must be seen to be being met throughout the placement.

The Dutch are taking this pretty seriously and are carefully reviewing companies that look to have Model agreements authorized. Between 2016 and 2017 over 4000 applications were made to the authorities to have Model agreements approved, of which over 1000 were rejected.

How TCP can help

TCP manages the hiring of contractors and makes sure that contracts are compliant, whether that is the contract between the contractor and TCP or the (framework) agreement between TCP and the client.

When dealing with a true self-employed contractor we will, during the term of the assignment, constantly be monitoring working conditions. Thus making sure that the work is being done in accordance with the contract (that excludes employment). By doing so we protect the client against a potential PAYE liability whereas the contractor does not need to worry about his status as a self-employed contractor.

If you would like to find out more about how TCP can help, please contact a member of our sales team on +44 208 5800 800.

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