Freelancer or employee? How to avoid getting an 'employee' by mistake
If you use the same self-employed person every week, the Tax Agency may consider them an employee. Here is what decides it.
It is easy to hire a freelancer. It is also easy to end up with an employee without knowing it, with A-tax, holiday pay and occupational injury insurance you haven't paid.
What the Tax Agency looks at
Not what you called the agreement, but how it works in practice:
- Instruction. Do you decide how, when and where the work is done? That points towards employment.
- Own risk. Does the freelancer have their own costs, own equipment, several customers and a risk of losing money on the job? That points towards self-employment.
- Payment. A fixed monthly amount regardless of results looks like salary. Payment per job or per deliverable looks like a supplier.
- Duration and exclusivity. One customer for two years full-time is hard to call self-employed.
How to keep it clean
- Agree a job, not hours. "Bathroom renovation, DKK 45,000", not "37 hours a week".
- Let the freelancer decide method and working hours within the agreement.
- Receive an invoice with CVR number and VAT for every job.
- Use several suppliers, and don't be their only customer if you can avoid it.
If it is employment after all
Then that's fine; employ the person. It is cheaper than a back-tax bill from the Tax Agency, and the employee gets the rights they actually have.
What LegaSum does
When you create a subcontractor in LegaSum, the CVR number is recorded and every job is settled against an invoice. If you use the same partner a lot and pay fixed amounts, LegaSum says so as one question: "This looks like a permanent arrangement; shall we look at whether it should be an employment?"