Chain liability in the Netherlands (ketenaansprakelijkheid) makes a contractor jointly and severally liable for the Dutch payroll taxes its subcontractor fails to pay on the contracted work. Foreign contractors who build, install or manufacture in the Netherlands, or subcontract that work, should have their subcontracts reviewed before work starts. A G account, complete records and clear indemnity clauses limit the amount the Dutch Tax Administration can claim.
What is chain liability under Dutch law?
Chain liability means that a contractor (aannemer) is jointly and severally liable for the wage tax owed by its subcontractor, and by every further subcontractor, in connection with the subcontracted work. The legal basis is Article 35(1) of the Dutch Tax Collection Act 1990 (Invorderingswet 1990).
For this purpose, wage tax includes the social insurance contributions that an employer pays together with wage tax. Article 1(i) of the Uitvoeringsregeling inleners-, keten- en opdrachtgeversaansprakelijkheid 2004 sets out that definition, which is why the Tax Administration speaks of payroll taxes (loonheffingen). You are not liable for administrative fines imposed on the subcontractor; the last sentence of Article 35(1) excludes them.
Each subcontractor counts as a contractor towards its own subcontractor (Article 35(3)(a)). Liability therefore moves up the chain to every link above the party that failed to pay. A business that carries out a work in the normal course of its business without a client, a so-called own builder (eigenbouwer), also counts as a contractor (Article 35(3)(b)).
Does chain liability apply to foreign contractors?
A foreign contractor is liable when its subcontractor performs the work in the Netherlands and owes Dutch payroll taxes on it. If the subcontractor performs the work abroad, the foreign contractor is not liable under Article 35, according to section 35.4 of the Leidraad Invordering 2008.
Where your company is registered does not protect you. What counts is where the work is done and whether Dutch payroll taxes arise there. Whether a posted worker owes Dutch wage tax or falls under a particular social security system is a tax and social security question. For that, contact the Tax Administration or a tax adviser; MAAK Advocaten does not advise on tax law.
Which work counts as a work of a material nature?
A work of a material nature (werk van stoffelijke aard) usually produces a tangible result, such as building, installing, demolishing, maintaining or manufacturing. Only a party that carries out such a work outside employment for a price to be paid is a contractor under Article 35(2) of the Tax Collection Act 1990.
The tax concept is wider than the civil-law contract for work under Article 7:750 of the Dutch Civil Code; see the article on construction contracts in the Netherlands. According to section 35.2.1 of the Leidraad Invordering 2008, the legislator meant to cover every sector of economic life. Work that mainly consists of mental or intellectual effort falls outside the rule. A fixed price or a cost-plus arrangement makes no difference under the wording of the Act, which only requires a price to be paid.
How does chain liability differ from hirer’s liability?
Under chain liability you subcontract a work; under hirer’s liability (inlenersaansprakelijkheid) you hire workers who work under your supervision or direction. Article 34 of the Tax Collection Act 1990 governs hiring, and that liability also covers the supplier’s VAT.
| Feature | Chain liability | Hirer’s liability |
|---|---|---|
| Legal basis | Art. 35 Tax Collection Act 1990 | Art. 34 Tax Collection Act 1990 |
| Situation | You subcontract a work of a material nature | Hired workers work under your direction |
| Taxes | Wage tax and contributions | Wage tax, contributions and VAT |
| G account | Art. 35(5) | Art. 34(3) |
The facts decide, not the label on the contract. Hirers also face a change. From 1 January 2027 the Act presumes the amount of hirer’s liability per tax period to be 35 percent of the invoice amount, reduced by payments into the supplier’s G account (new Article 34a Tax Collection Act 1990, Stb. 2025, 431). Wetten.overheid.nl still shows that text as a future version.
What exceptions apply to chain liability?
Article 35(4) of the Tax Collection Act 1990 contains two exceptions: work carried out wholly or largely at the place where the subcontractor’s business is established, and work that is ancillary to the sale of an existing item. The first exception never applies to the manufacture of clothing.
The first exception fits, for example, a joinery that makes window frames in its own workshop. The Act gives no percentage for “largely”, so record where the work takes place, for instance with time sheets per location. Liability also lapses if it is plausible that nobody in the chain is to blame for the non-payment (Article 35(6)). Section 35.8.2 of the Leidraad lists situations in which the tax collector does assume blame. One of them is hiring a subcontractor that you knew or could have known does not meet its payment obligations.
Who does the Tax Administration pursue first?
The tax collector (ontvanger) in principle first pursues the contractor that dealt directly with the defaulting subcontractor, and only then the links further up. Section 35.11 of the Leidraad Invordering 2008 sets out that order. The collector imposes liability by a formal decision under Article 49 of the Tax Collection Act 1990.
The tax collector may depart from that order. If a contractor failed to take reasonable precautions, the collector may pursue it first, wherever it sits in the chain. If the debt would otherwise remain unpaid, the collector may hold the whole chain liable at once.
Are you planning work in the Netherlands with your own subcontractors, or have you received a letter from the Tax Administration? MAAK Advocaten reviews with you which terms your subcontracts need. Contact us about your subcontracts.
How does a G account work?
A G account (g-rekening) is a blocked bank account held by the subcontractor, into which you pay the payroll tax portion of the contract price. Payments made in line with the rules reduce your liability under Article 35(5) of the Tax Collection Act 1990.
The balance may only be used to pay wage tax and VAT, and the tax collector holds a right of pledge over it (Article 1(k) of the Uitvoeringsregeling). A subcontractor can only open a G account at a bank where it already holds a business current account. According to the Tax Administration, applicants hear back within 3 weeks. The protection falls away if you knew or should reasonably have suspected that the subcontractor would not pass the money on to the tax authorities.
The Act sets no fixed percentage for the deposit. The Tax Administration refers to the estimated amount of payroll taxes and advises the parties to agree in advance how the G account will be used. A self-employed person without staff (zzp’er) cannot open a G account, because he does not withhold payroll taxes.
What records does the Uitvoeringsregeling require?
A payment into a G account only counts if you meet Article 6 of the Uitvoeringsregeling inleners-, keten- en opdrachtgeversaansprakelijkheid 2004. The requirements concern the invoice, the payment and the way you keep your records. If anything is missing, the tax collector only takes into account what actually reached it.
- The subcontractor’s invoice meets Article 35a of the Dutch VAT Act 1968 and states the contract number or reference, the period of the work and the name or reference of the work.
- Your payment quotes the invoice number, so the invoice can be traced in your records straight away.
- Your records show the contract, the details of performance including a register of the people deployed and their working days and hours, and all payments.
The general Dutch retention period is seven years (Article 52(4) of the General State Taxes Act, Algemene wet inzake rijksbelastingen). Section 35.9 of the Leidraad also lists identity data for the subcontractor’s workers, including an A1 certificate where relevant, which you need if you want the tax collector to reduce your liability. Processing must comply with the GDPR. The Dutch citizen service number (BSN) is not special category data under Article 9 GDPR, but Article 46 of the Dutch GDPR Implementation Act (UAVG) only allows its use for purposes set by law.
What does a statement of payment history prove?
A statement of payment history for chain liability (verklaring betalingsgedrag ketenaansprakelijkheid) confirms that the subcontractor has paid the payroll taxes due under its returns and any additional assessments. The subcontractor applies for it. It gives no guarantee for the future (Leidraad Invordering 2008, section 35.12.1).
The statement itself says that it offers no indemnity against liability under Article 35 (section 35.12.6). Use it as a warning signal, not as a substitute for the G account. A self-employed person without staff receives no statement, but a written refusal that he can show you. A certificate of conduct says nothing about payroll taxes.
What should a subcontract under Dutch law contain?
The Act protects you only to the extent you meet its conditions; the rest you arrange in the contract. A good subcontract links payment to the G account and to Article 6 of the Uitvoeringsregeling. It also gives you recourse against the subcontractor if the Tax Administration pursues you.
- Split each instalment into an amount for the G account and an amount for the ordinary account, and record how you calculate the payroll tax portion.
- Require invoices that comply with Article 6 of the Uitvoeringsregeling.
- Ask for a staff list, time sheets and a recent statement of payment history for each period.
- Prohibit further subcontracting or hiring without your written consent.
- Include an indemnity clause and a right to withhold payment while documents are missing.
Suppose a Belgian steel construction company assembles a warehouse in Rotterdam and subcontracts the welding to a Dutch firm with six employees. The contract provides that part of each instalment goes to the firm’s G account and that the welders are recorded daily. If the firm fails to pay its payroll taxes, the qualifying G account payments reduce the Belgian company’s liability. For the remainder it has a claim under the indemnity clause. More on indemnities is in the article on warranties and indemnities under Dutch contract law. If the relationship breaks down, read about terminating a construction contract under Dutch law.
How do you object to a liability decision?
You can lodge an objection (bezwaar) with the tax collector against a liability decision under Article 49 of the Tax Collection Act 1990. The time limit is six weeks (Article 6:7 of the General Administrative Law Act) and starts on the day after the decision is announced.
You may argue, for example, that there was no work of a material nature or that an exception under Article 35(4) applies. Other grounds are qualifying G account payments and the argument that nobody in the chain is to blame. For the tax calculation, involve a tax adviser. For the contractual side, such as recourse against your subcontractor, MAAK Advocaten can assist.
Do you subcontract work in the Netherlands, or work there as a subcontractor yourself? MAAK Advocaten advises foreign contractors on subcontracts, G account arrangements and indemnity clauses under Dutch law, as a contract lawyer in the Netherlands. Have your subcontract reviewed.
Frequently asked questions about chain liability in the Netherlands
Am I liable for my subcontractor’s VAT?
Chain liability under Article 35 of the Tax Collection Act 1990 covers wage tax and the contributions paid with it. You are liable for VAT only as a hirer under Article 34, when workers are placed at your disposal.
Can a foreign subcontractor open a G account?
The Tax Administration cooperates on written request if the subcontractor carries on a business of subcontracted work and is a withholding agent for Dutch wage tax (Article 2 Uitvoeringsregeling). It first needs a Dutch payroll tax number, and the account must be held with a bank licensed in the Netherlands.
Am I liable if I hire a self-employed person?
A self-employed person without staff pays no payroll taxes, so there is no wage tax for which you could be liable under Article 35 of the Tax Collection Act 1990. You should still check that the person really works outside employment.
Does chain liability apply to hourly-rate contracts?
Article 35(2) of the Tax Collection Act 1990 only requires that the work is done for a price to be paid. An hourly-rate or cost-plus contract is therefore covered in the same way as a fixed-price contract.
How long must I keep the records?
The general Dutch retention period is seven years (Article 52(4) of the General State Taxes Act). Keep contracts, invoices, proof of payment and time sheets for at least that long.
