Salary: the minimum and the payslip
As director-major shareholder (DGA), you pay yourself a salary through the company's payroll. Under the customary salary rules, there is a minimum. It is the highest of three amounts. These are the salary in the most comparable job, the salary of the best-paid employee in the company, and the yearly standard amount. Salary is taxed progressively in box 1, so per euro it is the most expensive way to pay yourself. It also has the most value. With a payslip, you can get a mortgage, rent a home and save for a pension with tax relief. A dividend lacks this advantage. While a new BV is still unable to pay this minimum, you may take a lower customary salary for up to three years. You can combine this with borrowing up to €500,000 from your own BV. The lower salary is what saves tax. At €36,000 compared with €58,000, you keep about €7,100 a year more. After a later dividend, about €2,800 of that remains. The loan gives you access to money, but your tax stays the same. Calculate it with your own figures.
Dividend: planned once a year
For a dividend, the shareholders make a resolution. The company also does two checks, the balance test and the distribution test, to confirm that it can afford the payment. The company withholds 15% dividend tax. You can deduct this from your box 2 tax, which is 24.5% up to €68,843 and 31% above that. For fiscal partners, the lower bracket is doubled. Plan each year to pay out dividend up to the limit of the 24.5% bracket. Avoid payments made in a moment of panic or excitement. You can try the numbers in the salary and dividend calculator.
Loan: money now, dividend later
If you borrow from your own BV (besloten vennootschap, the Dutch private limited company), you have money today. You keep the profit in the company, where it is taxed at company rates. It must be a real loan, with a written agreement, businesslike interest and the intention to repay. Under the excessive-borrowing law, the part of your loans from your own BV above €500,000 on 31 December is taxed in box 2 as if it were a dividend. A properly secured loan for your own home is excluded from that limit. See borrowing from your own BV for the full rules.
The yearly pattern
- Set the salary once, in writing, at a level you can defend to the Tax Administration. Review it each time the standard amount changes.
- Decide on the dividend in December, when you know the figures for the year.
- Invest the retained profit inside the holding. See index investing from your BV.
With these three ways, you pay for your life now at the lowest cost you can defend. At the same time, you invest the surplus for the years after your channel.