What is a commission agreement? Explanation and use

What is a commission agreement? It is an arrangement whereby one person works for another in exchange for remuneration dependent on results: a percentage of turnover, an amount per closed deal, or a margin on the sales price. The law does not recognize a separate title with that name. Depending on what is actually done, the agreement falls under a mandate (Art. 7:400 BW), mediation (Art. 7:425 BW), agency (Art. 7:414 BW), or, in the case of continuous sales mediation, under the mandatory agency regulations (Art. 7:428 BW). This classification determines everything: when the commission is earned, what notice period applies, and whether compensation must be paid at the end. Below is an explanation of how to recognize the correct form and what that costs or yields.

The short answer

• No specific statutory regulation: the commission agreement is a collective term; the law looks at the actual content, not at the title above the document.
• Mediation: remuneration is due as soon as the agreement is concluded through the mediation (Art. 7:426 paragraph 1 of the Dutch Civil Code).
• Agency: continuous mediation for remuneration without subordination constitutes an agency agreement (Art. 7:428 BW), subject to mandatory law.
• Consequences of agency: statutory notice periods (Art. 7:437 BW), commission rules (Art. 7:431 et seq. BW), and client compensation upon termination (Art. 7:442 BW).
• Commission agent: anyone who acts in his own name but on behalf of another is an agent (Art. 7:414 paragraph 2 in conjunction with 7:420 and 7:421 of the Dutch Civil Code).
• Recording pays off: basis, rate, timing of earnings, exclusivity, and duration are the five points surrounding disputes.

What exactly is a commission agreement from a legal perspective?

In practice, entrepreneurs use the term for three different things. The first is the referral agreement: someone introduces customers and receives a percentage for doing so. The second is the sales agreement: someone systematically sells products or services from another party for commission. The third is the classic commission agent: an intermediary who buys or sells in their own name on behalf of their client, known from the trade in goods and securities.

Legally, these three are treated differently. The introduction agreement is usually a contract for services with an intermedial character (Articles 7:400 and 7:425 of the Dutch Civil Code). The sales agreement quickly shifts towards agency as soon as it is permanent. In the Civil Code, the commission agent has merged into mandate: the mandatary who undertakes to act in his own name (Article 7:414, paragraph 2, of the Dutch Civil Code), with the special rules regarding indirect representation in Articles 7:420 and 7:421 of the Dutch Civil Code.

What you call the document is not decisive. The judge looks at the rights and obligations agreed upon by the parties and the manner in which they have implemented them. An agreement labeled "commission agreement" can therefore simply be an agency agreement, with all the mandatory legal consequences that entails.

Commission, mediation, agency or mandate

• Mediation (Art. 7:425 BW). The mediator brings parties together for remuneration. That remuneration is due as soon as the agreement is concluded through his mediation (Art. 7:426 paragraph 1 BW). If the agreement is concluded subject to a resolutive condition and that condition is met, the right to remuneration lapses (Art. 7:426 paragraph 2 BW). In principle, the mediator may not act for both parties simultaneously without consent (Art. 7:417 BW); in the case of consumers and immovable property, this is even prohibited.
• Agency (Art. 7:428 BW). Durable mediation in the conclusion of agreements, for remuneration, without subordination. This is mandatory law and the consequences are far-reaching: statutory notice periods, a right to commission even for orders received after the termination (Art. 7:432 BW), and a client compensation of up to a maximum of one year's remuneration (Art. 7:442 BW).
• Mandate and commission (Art. 7:414 BW). The intermediary performs legal acts on behalf of the principal, in his own name or in the principal's name. If he acts in his own name, Articles 7:420 and 7:421 BW apply to the relationship with the third party.
• Standalone referral fee. A one-off introduction for a fixed amount constitutes a standard assignment. As long as there is no sustainability and no structural sales effort, the agency arrangement does not apply.

The practical rule of thumb: the more sustainable and the more focused on concluding agreements, the greater the chance that the judge will assume agency. Anyone who does not want this must actually structure the collaboration differently, and not just give it a different name.

When is the commission earned?

This is the point where most conflicts arise. There are four possible moments: when the lead is introduced, when the agreement is signed with the client, upon delivery, or only after the client has paid. In the absence of an agreement, the moment of formation applies in mediation (Art. 7:426, paragraph 1, of the Dutch Civil Code). In the case of agency, the right to commission arises as soon as the principal has performed or should have performed the agreement, and lapses if it is established that the third party will not pay for a reason that does not concern the principal (Art. 7:433 and 7:434 of the Dutch Civil Code).

Furthermore, the basis for calculation plays a role. Do we calculate based on turnover excluding VAT, on the gross margin, or on the amount paid by the customer? Do shipping costs, additional work, and subscription renewals count? What happens in the event of a credit note, return, or non-payment? And for how long does the commission continue for a customer who has been referred only once: a one-off, two years, or as long as the customer continues purchasing? Anyone who answers these four questions in the contract will have already prevented most disputes.

Practical example: A software company agrees with an independent consultant that he will receive a 10 percent commission on clients referred. The contract is silent regarding the duration of this entitlement. After two years, a single referred client still generates €90,000 per year, and the consultant claims €9,000 per year without further effort. A single sentence regarding the duration of the commission entitlement would have limited this.

Where things go wrong in practice

• Unwanted agency. The cooperation takes on a permanent character, and upon termination, a notice period of four to six months applies (Art. 7:437 BW) plus client compensation (Art. 7:442 BW).
• Disguised employment. Fixed working hours, instructions, and exclusivity can turn the arrangement into an employment contract (Art. 7:610 BW). The Tax and Customs Administration has resumed enforcement against bogus self-employment since 2025.
• Serving two masters. Receiving a commission from both sides without the knowledge of both parties conflicts with Article 7:417 of the Dutch Civil Code and the duty of care under Article 7:401 of the Dutch Civil Code.
• Licensing requirement. Brokering financial products or insurance requires a license, and for certain products, a ban on commissions applies under the Financial Supervision Act.
• No records. Without agreed reporting, the commission agent cannot substantiate his claim; Article 7:403 of the Dutch Civil Code does grant a right to an accounting, but this is retrospective and cumbersome.

Honest recommendation

You don't always need a lawyer for this. If it concerns a one-off introduction for a fixed fee, a limited percentage on a single assignment, or a collaboration of a few months with a known contact, a short written agreement with four elements suffices: what is being charged, the percentage, when it is earned, and when it is paid. Put this in an email that the other party confirms, and you are sufficiently covered.

Do have it reviewed as soon as the collaboration becomes structural, if the commission continues on recurring sales, if there is exclusivity for a territory or customer group, if the counterparty is located abroad, or if the commission becomes a substantial part of someone's income. These are precisely the situations in which the agency regulations and classification as an employment contract come into play, and in which an incorrectly drafted contract results in a bill of tens of thousands of euros upon termination.

Read more: drafting a commission agreement and having a commission agreement drafted. You can arrange this directly via the commission agreement.

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