Big spike in self-employed closing shop ahead of stricter rules

Just over 21,000 self-employed persons closed down their businesses in December, a massive 54 percent increase compared to a year earlier, the Dutch Chamber of Commerce (KVK) reported on Monday. The KVK suspects the law against fake self-employment, which took effect on January 1, is behind the spike.

According to the KVK, this was the first time that more freelancers quit than started. Over 14,000 people registered as self-employed in December, a decrease of 13 percent.

The total number of self-employed people did still grow compared to December 2023, but the increase was much weaker than in previous months. On December 31, there were 1.7 million self-employed persons registered in the Netherlands, 3.1 percent more than the same day in 2023.

Employers who use self-employed persons for work that should actually be done by a permanent employee can now receive a supplementary assessment on their social security contribution. The Tax Authority is not yet fining violators of the new law, but the threat of a supplementary assessment is already causing uncertainty in the labor market, according to a survey by HeadFirst Group among 1,201 freelancers.

38 percent of freelancers told HeadFirst Group that they are missing out on assignments due to the law against false self-employment, up from 25 percent in September. 18 percent said they were considering abandoning freelancing for permanent employment.

“It is important to keep calm together in this tight labor market,” said Marion van Happen of the HeadFirst Group. “Organizations must get their processes in order, enter into discussions with freelancers, and realize that after 1 January 2025, it will still be possible to hire self-employed people for assignments in an effective and responsible manner.”