What is an arm’s-length rate?
It is the rate that an independent third party (a bank or investor) would charge for the same loan under comparable conditions. The rate depends on the term, the security (collateral), the borrower’s creditworthiness and the current level of interest rates.
Indicative rates for 2026
| Loan type | Indicative rate |
|---|---|
| Current account (short, flexible) | 4, 6% |
| Consumer purpose (unsecured) | 5, 8% |
| Primary-residence mortgage | 3.5, 5% |
| Business loan with collateral | 4, 6% |
Consequences of a rate that is too low
When the BV charges the DGA a below-market rate, the benefit can be treated as a hidden dividend (an informal distribution). The Tax Authority then taxes the interest advantage as income at the DGA level and collects the corresponding dividend tax from the BV.
Put the rate in writing
Record the percentage in the loan agreement or current-account agreement. Check it every year against market rates. Other rules apply as well, for example on documentation, the repayment schedule and the €500,000 threshold. You can read more about these in borrowing from your BV: rules and pitfalls and the excessive borrowing rules for 2026.
Last verified: 19 July 2026. Source: Belastingdienst.
You can arrange the notary, the KVK registration and the VAT number from abroad. See setting up a BV in the Netherlands.
Related articles
See also Excessive Borrowing from Your BV in 2026 and Current Account DGA (Rekening-Courant).