How it works
Under Dutch company law, the board protects the creditors. Before a BV pays dividend, repays share premium or buys back shares, the board must approve the payment. The board approves only when the company can keep paying its debts as they fall due. This applies to the period after the payment, usually about a year.
The board looks ahead. It checks the expected cash flow, loans that come due, the lease, taxes, salaries and known risks. The board refuses a payment that would leave the company short of cash, even when the balance sheet shows a profit.
The balance test comes first. The equity must stay above the reserves required by law and the articles. The distribution test comes second and is about cash. The board records both tests in a board decision.
Directors are personally liable for the shortfall if they approved a payment that they knew would leave the company unable to pay its debts. The same applies if they should have known this. A shareholder who received the payment in bad faith must return it. The tests also apply in a one-person BV.
Example
A BV has €80,000 profit. It also has a €60,000 tax assessment due in three months and expects a slow quarter. The director approves a dividend of €20,000 and records the reasons, with a cash forecast. The BV keeps the remaining €60,000 to pay the assessment.
The figures
Every rate for 2026 is listed in Netherlands tax rates 2026, and the figures for 2027 are in Netherlands tax rates 2027.
Questions people ask
Is the test needed in a one-person BV?
Yes. The law applies to every BV. The director records the decision and the reasons. This takes ten minutes. With this record, the director is personally protected.
Does the test apply to interim dividend?
Yes, to every distribution: interim dividend, final dividend, repayment of share premium and share buy-backs.
Holdwise, Hoofddorp. We keep this definition in line with our Dutch and German glossaries, and the figures are those for the tax year 2026. Updated 30 September 2026.
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