It’s very common that a DGA (director and major shareholder) of a BV (private limited company) has debts with his company. These often arise because private costs are paid from the corporate bank account or because money is temporarily borrowed from the BV. Debts and claims between the DGA and BV – the director’s loan – are not seen as problematic by Dutch legislation, unless this can be defined as excessive borrowing.
Background of debts
Often a DGA will take out a loan from the BV to supplement his salary or to make private investments. By supplementing the salary by means of a loan instead of a dividend payment, taxation can be postponed and in some cases even avoided.
A short note on private investments. When you withdraw money from your BV for a private investment, you’ll generally pay this out as a dividend, meaning you pay income tax on this in box 2 (26.9%). This leaves 73.1% of the amount left to invest with. The assets that you invest are subsequently taxed in income tax box 3 as wealth tax.
Another option is to take out a loan from the BV. In that case, you don’t yet pay tax in box 2, so you can invest with the full 100% of the borrowed amount. In addition, a debt arises that’s settled against your investments, resulting in you having no assets. As a result, you don’t pay tax in box 3. This construction leads to higher returns and less tax. So this is very interesting for a DGA!
However, such constructions are a thorn in the side of the legislator. That’s why it wants to introduce rules regarding excessive loans of the DGA with the BV. This new legislation is likely to come into effect as of 2023.
Nederlands
