Comparing legal forms in the Netherlands
Sole proprietorship or Partnership
DGA Salary - Director's minimum salary in the Netherlands
Director/Major-shareholder (DGA) salary
The general rule is that a Director/Major-shareholder (DGA) in a BV should receive a salary. This salary is set at €48.000 in 2022. The minimum DGA salary has been put into place to prevent BV’s from avoiding paying income tax, by paying out dividends that are much lower taxed and paying out very little to no salary.
However, this seen as a legal fiction: in many cases DGA’s do not have to pay out that amount of salary. Many clients want to reinvest every euro they make back into the company, not pay it out as salary. In practice we see that the tax authorities are not that strict when it comes to this rule. If there is nothing to pay out, it cannot be paid out either. On the other hand, if the means are available you are supposed to pay out a certain minimum wage.
When will I considered a Director/Major-shareholder (DGA)?
- You have at least 5% of the shares in a BV and,
- You are working in your own private limited BV company.
This means that if you have less than 5% of the shares in a BV, you will not be forced to pay out a salary.
So how do I avoid paying such a salary when I am starting up a BV in the Netherlands?
The general rule is that you should pay out a salary if you can. So rather than avoiding paying out a salary completely (which is often not possible), you should focus on decreasing the amount of salary.
There are a few options:
- Demonstrate that the salaries in the most comparable employment are less than €46.000. The argument that a comparable position in another country has a lower salary is not valid.
- Demonstrate that your company make structural losses and such a salary would jeopardize the company.
- If you work part-time or you have not worked a part of the year, this might be taken into consideration in the determination of the minimum salary.
- If you are in the start-up phase of your company, you can demonstrate that you have to make many investments and you have little income yet.
How do I apply for a lower BV salary?
After incorporation you do one of the following two things:
- Send a request to the tax authorities
- Reporting a zero wages declaration
Our tax partner can help you with this.
What you should NOT do:
- Pay out dividend before you have paid out €48.000 in salary to the director/major-shareholder.
- Extend a loan from the BV to the director/major-shareholder for personal expenses. Such a loan would mean that you are able to pay it out as salary.
How does this work for a BV holding structure?
If you have incorporated a holding BV together with an operating BV, the DGA salary rules apply only to the holding. In most cases, the holding BV is a manager in the operating BV. The holding company invoices the operating company for management services. You are personally a director and shareholder in the holding BV and therefore employed in the holding BV. You will (if possible) pay out a salary from the holding BV to yourself personally.
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