A consultancy agreement is a contract for services, often with specific deliverables and milestones. Working internationally entails specific risks: liability for advice, IP ownership on deliverables, tax implications, and employment law classification. In our practice, we advise Dutch clients as both client and contractor. Under Dutch law, this is a contract for services under Book 7, Title 7 of the Dutch Civil Code.
What is the legal problem?
Consultancy agreements involve many risks. With advice, an obligation of result or a best-efforts obligation applies. IP on reports, models, and software can lead to unexpected disputes regarding ownership. Working internationally entails risks regarding permanent establishment, VAT issues, and employment law classification. Without clear demarcation, parties bear risks they did not intend.
What does the law say?
Under Dutch law, consultancy is generally a contract for services under Article 7:400 of the Dutch Civil Code. For IP, Article 7, paragraph 1 of the Copyright Act stipulates that the client acquires rights to works created specifically for him, provided this has been agreed upon. The GDPR (Regulation 2016/679) applies to the processing of personal data under Article 28. For permanent establishments, Article 5 of the OECD Model Convention on Tax Treaties applies.
For independent consultants, anti-abuse rules regarding bogus self-employment may apply. In the Netherlands, the DBA Act (Assessment of Employment Relationship) applies, enforced since January 1, 2025. In the UK, IR35 applies under the Income Tax (Earnings and Pensions) Act 2003.
What risks do companies face?
Unlimited liability for advice can lead to claims that far exceed the fee. Unclear IP rights lead to conflicts upon transfer or termination. An unintended permanent establishment abroad under Article 5 of the OECD leads to tax liability and social security contributions. Reclassification of consultancy as an employment contract leads to wage costs and retroactive social security contributions. International legal fees in disputes escalate rapidly.
Practical example from our practice
We advised a Dutch consultant who worked exclusively for a British client for three years, on-site in London with daily supervision. HMRC classified the relationship as IR35-disguised employment. The client was required to pay back payroll tax and NIC — approximately £280,000. Upon renegotiation, we incorporated the following: Statement of Work per assignment, consultant's own funds, no exclusivity, and a project duration of a maximum of 12 months with an independence test. Subsequent relationships were held on a stand-up meeting under IR35 and the Dutch Employment Relationships Act (Wet DBA).
What can you do?
Work with a Statement of Work per assignment. Define scope, delivery dates, and acceptance. Regulate IP ownership under Section 7 of the Copyright Act (often transfer to the client after payment). Set the liability ceiling equal to the fee. Coordinate tax risks with a tax specialist. Avoid features of an employment contract (exclusivity, fixed workplace, daily management). See also our article on IT contracts with foreign clients.