Is your team ready for the DBA Act (Employment Relationships Deregulation Act) coming into force in the Netherlands? This new law aims to reduce the misuse of freelancers or contractors as employees. The DBA Act is currently in its transition phase, giving businesses until the end of 2025 to prepare.
Failing to comply before the enforcement in 2026 could lead to fines, legal challenges, and reputational damage. In this article, we explain the DBA meaning, key highlights, timeline, and what Dutch businesses need to do to stay compliant.
Key Highlights and the DBA Act Meaning
The DBA Act, short for Deregulering Beoordeling Arbeidsrelaties, prevents companies from using freelance work to hide actual employment. The Dutch Tax Administration calls this false self-employment, a practice often linked to tax evasion.
Freelancers (ZZP’ers) enjoy certain tax benefits as entrepreneurs, and businesses don’t pay payroll or pension taxes on them. However, when a freelancer works like an employee, it breaks the law’s intent. To distinguish genuine self-employment, authorities examine criteria such as:
- Autonomy over work hours and location
- Freedom to use own tools or equipment
- Clearly defined, project-based assignments
- Limited supervision from the client’s employees
- Negotiable and flexible contract terms
But missing one criterion doesn’t confirm false self-employment. Soon there will be new clearer rules on what is and what isn’t self-employment.
Enforcement timeline of the DBA Act
The introduction of this Act demonstrates that the Dutch authorities will be taking the enforcement any instances of false ‘self-employment’ more seriously. 2025 represents a ‘transition period’ where businesses and freelancers may operate as they are without penalty until 2026.
They introduced the first version of this Act was in 2016, however, it took several years of iteration due to criticism that the Act was not strict enough to meaningfully curb worker misclassification.
This year, 2025, is the transition period for DBA Act; where businesses and freelancers are expected to prepare themselves for compliance. During this year, no penalties will be issued for the violation of this Act specifically, however it will be enforced. In this period, audits may be conducted with the expectation to complete post-assessments of the working relationship.
Starting in 2026, businesses and freelancers found in non-compliance with this Act will be subject to penalties and fines. Both the business and the freelancer have shared responsibility ensuring compliance.
DBA Act meaning and Implications for businesses
Both the business, as well as the freelancer, share responsibility for compliance with the DBA Act. There are potential financial consequences of non-compliance, including repayment of unjustified tax benefits, and the business may be liable for payroll taxes and pensions in addition to any fines incurred.
Further, freelancers in violation risk reclassification from contractor to employee, leading to additional costly obligations: such as employment contracts.
To the consequences of non-compliance of DBA Act, there are several tools available to help businesses and freelancers’ evaluate the validity of their working relationship. We expect there to be explicit rules announced very soon around such a relationship. The Dutch tax administration has also created a web module and questionnaire to help assess the relationship.
For more complicated and specific situations, we always advise speaking to an expert or working with a partner to identify an alternative, compliant solution. Speaking of which…
Suggestions for DBA Act compliance
Working contractors and freelancers are just one solution businesses use to achieve their short-term goals and projects. In the event the details of the DBA Act throw a wrench into your business’ operations, there are plenty of alternative solutions to consider so you can still achieve what you need:
Payroll services are utilized to hire a specific freelancer or contractor to your team (or ours, if preferred). This solution is great if you realize that you need to the freelancer or contractor to develop a relationship closer to an employee. A payroll solution will help alleviate some of the legal and administrative responsibilities also typically handled by freelancers and contractors.
Short-term, Flexible (or project-based) contracts will be the most straightforward solution for many businesses working with freelancers in the Netherlands. We expect that many businesses will simply need to review the terms of their agreements to clearly demonstrate the freelancer’s entrepreneurship and flexibility. Whenever there is uncertainty around employment or working agreements, it is always prudent to work with an expert.
Secondment arrangements are also worth calling out as a potential solution. Depending on the skillset, you can work with a business who can “loan” an employee for a temporary period. This is a great solution for businesses who are unable to hire for operationally-significant tasks and also cannot predict when they are able to hire somebody in-house to perform those tasks. For example, Octagon Professionals loans HR specialists and administrators to businesses who lack their own. We’re also loaning other skillsets when needed, such as IT.
Ensure you are compliant before 2026
If your business regularly works with contracts and/or freelancers, it is important to ensure your relationship does not fall under the category of “false self-employment” that the DBA Act is here for. Take this year to evaluate your situation, and possibly, develop an alternative solution. We at Octagon Professionals are experts in the field of employment with a proven track record supporting international businesses achieve their employment goals in the Netherlands. Send us a message today with your challenge, and together we will find a solution that works for you.
