The Netherlands has seen a striking trend in recent decades, namely a significant increase in the number of self-employed people without personnel (zzp'ers). This growth has led to changes in the labour market, economy and society as a whole. In this article, Artlupa looks at the causes and consequences for you as an entrepreneur or (future) self-employed person.

Rapid rise

At the end of 2022, the Central Office for Statistical research in The Netherlands (CBS) calculated that between the third quarter of 2021 and the same quarter of 2022, the number of self-employed people (aged 15 to 75) grew by 127 thousand to 1.2 million. The increase was largest in the care and welfare professions. In some occupational groups, the increase in the number of self-employed (compared to one year previously) was accompanied by a decline in the number of employees. This was the case, for example, in the care and welfare professions and in the technical and commercial professions. This shift in the labor market has consequences for entrepreneurs and means more and more employees are considering becoming self-employed. But before we get into the consequences, let's first explain what the causes of this trend are.

Causes

Flexibility and autonomy

One of the main reasons for the increase in the number of self employed people in the Netherlands is the search for flexibility and autonomy. The desire for control over one's own working hours and projects is an important motivation to 'go it alone'. As a freelancer, you have the freedom to choose your own clients, set rates and determine your own workplace. This attracts many professionals who want to shape their careers on their own terms.

Digitization

In addition, the rise of digital technologies has made it easier to work independently. Self-employed people can now often work from anywhere thanks to online communication tools and technologies. This has lowered the threshold for starting your own business and made it easier to offer services or products (internationally).

Changing working relationships

Traditional employment relationships are shifting to more temporary and project-based collaborations. Companies are increasingly inclined to hire specialized contractors for specific projects instead of hiring full-time employees. This offers organisations more flexibility and fewer legal and contractual obligations to the people who work for them. Conversely, it allows freelancers to offer their expertise to different companies.

Support for entrepreneurship

The Dutch government has set up initiatives to stimulate entrepreneurship, including simplifying tax rules for self-employed people and offering financing opportunities for entrepreneurs just starting out. This has further fuelled the growth of the self-employed sector.

Although the reasons for the shift to more self-employment mainly stems from the benefits experienced by entrepreneurs and self-employed people, This new trend brings new challenges as well as opportunities.

Consequences

More uncertainty

Although self-employed people experience more autonomy, this often goes hand in hand with less economic security. As a self-employed person, you are not guaranteed a fixed income, pension scheme or social security. This could lead to a discussion about the need for better social protection for self-employed workers and new legislation. Many self-employed people currently lack access to things like health insurance, pension plans and dismissal protection. This lack of facilities could have unpleasant (financial) consequences for many self-employed workers. With health insurance, pension schemes and protection against dismissal through their employer, employees run fewer socio-economic risks. With an increasing number of self-employed people, there is a new challenge to reduce financial uncertainty. The government has proposed certain labour market reforms. For example, there are various  measures that  you as a self-employed person and entrepreneur may have to address in the future.

Competition

An increase in the number of self-employed workers could lead to more competition within certain sectors, potentially putting pressure on rates and wages. Freelancers often have to remain competitive in terms of price and quality in order to win contracts. Increasing competition requires self-employed people to position themselves more competitively in the market place. As a result, the allowances for self-employed persons may decrease rapidly, which raises the question of whether entrepreneurship for the self-employed will remain sufficiently rewarding and as attractive in the future.

Shifting relationships of authority

Traditionally, most organisations have a top-down hierarchy: The boss is at the top and manages a small group of managers who in turn have a larger group of employees under them. The larger the organisation, the more layers the pyramid has. But in each of these, large or small, authority comes from above. If more self-employed workers start fulfilling tasks of employees, this relationship of authority will shift. As a self-employed person, you work for clients, but you are and always remain your own boss. Employers will shape projects more with dialogue and relationships of authority will become less and less bottom-up. If the demand for freelancers in sectors exceeds the supply, the pyramid may even turn around completely. The client could then be more dependent on the self-employed person than the other way around.

Individualism

Increasing individualism within the labour market is another consequence of the rise in the number of self-employed workers. Whereas in the past people were often employed by the same employer for decades, working relationships are increasingly short-term, project-based and isolated. Loyalty and team cohesion can be compromised. The volatility of project-based work has the risk of undermining involvement with and knowledge of organisations. An increasing pool of self-employed workers in the workplace can also reduce the interconnectedness between colleagues. As an entrepreneur, you are faced with the challenge of keeping the bond with the organisation and each other intact. As a self-employed person, you may have to contend with the fact that the more individualistic nature of your work could lead to isolation. The rise of public workplaces and gatherings for self-employed workers is an example of a solution to the demand for connectedness between self-employed workers.

Want to know more?

Are you considering becoming self-employed? The  Chamber of Commerce  offers extensive information and support for freelancers starting out.  The Tax and Customs Administration  provides information about tax matters for self-employed persons. Both webpages are in Dutch.

What is the starting date of my Dutch enterprise?

Are looking into starting your own enterprise? If you wait too long with registration at the Chamber of Commerce this can be disadvantageous. Do not wait too long and read below what you should take into account.

Registration Chamber of Commerce

You have a business idea and maybe even some clients. After brainstorming about your business plan and the approach to your business, the time has come to register in the Trade Registry of the Chamber of Commerce. The date of registration of your enterprise with the Chamber of Commerce is often a joyous occasion. It is the day you have made your enterprise official and this moment is celebrated by many new entrepreneurs.

The registration of your enterprise is not just the official start of your enterprise. The starting date is also the date that the Tax Authorities consider you an entrepreneur as well. this has consequences for the deduction of expenses and the entrepreneurial deduction.   

Starting date

The date on which you register in the Trade Registry is for the employees of the Chamber of Commerce often the official starting date of your enterprise. The actual starting date of your enterprise does not necessarily need to match the date of registration. Usually it takes longer to start your enterprise and the decision to register at the Chamber of Commerce is made when you are further along in the process.

Self-employed deduction

If you have a sole proprietorship or general partnership (V.O.F) and you work more than 1.225 hours annually in your own enterprise. You are entitled to the self-employed deduction. In the first three years you are also entitled to the starters deduction. De self-employed deduction and starters deduction together can amount to a maximum tax benefit of around €4.500.

It can, therefore, be advisable to take this into consideration when you want to register in the Trade Registry. For example, if you register on the 1st of October or November, it can be difficult to prove that you worked more than 1.225 hours on your enterprise in that year. Even if you did, but you only registered later in the year and the starting date is the same as the date of registration in the Trade Registry.

We recommend, therefore, to keep a log of all your hours, from the first moment and save the documentation of all your entrepreneurial activities.   

Expense Deduction

The expenses you have made prior to the registration date at the Chamber of Commerce are deductible until around three months before you registered. Expenses for this date can only be considered as business expenses if you can demonstrate that these expenses are entirely business related.

Would you like more advice about your starting date at the Chamber of Commerce or do you have more questions regarding this?

Please do not hesitate to contact us.