On 31 December 2023, the “knife” falls for the first time under the DGA excessive borrowing scheme.
Action?
That means you still have over six months to take measures, if desired, to avoid the substantial interest tax on the excess part of your debts to the BV(s). That sounds short, but working out the desired measures may take some time. Reason enough to check whether action is required before the summer holidays.
Threshold
You are not affected by the levy if the total of your debts to your own BV(s) is less than the threshold. Your debts to the BV(s) are not netted off against your receivables from the BV(s) in this context. The threshold is €700,000 (for tax partners, not double) + the owner-occupied housing debt. Only owner-occupied housing debt that fully meets the criteria to deduct the interest owed as owner-occupied housing interest in Box 1 qualifies as owner-occupied housing debt. For owner-occupied housing debt incurred after 31 December 2022, the additional requirement is that the debt must be secured by a mortgage right in rem on the owner-occupied property.
Above the threshold
When your debts cross the threshold, you have a choice between taking action or not.
If you do not take action, you will owe tax on the notional regular substantial interest benefit based on your 2023 tax return (to avoid tax interest, ask the Inland Revenue for a provisional assessment in time), but the debt/claim will remain unchanged (including fiscally).
Which actions you can take depends on your personal situation. You can pay off (part of) the debts with dividends to be paid by the BV (you will then pay substantial interest tax on the dividends). Or you transfer movable (e.g. securities) or immovable property to the BV.
At a glance
Early summer is a good time to sort out your position on excessive borrowing and weigh up how to deal with it. There is then plenty of time to implement any measures before 1 January 2024.
Also note any new actions you take up to 31 December 2023. If this creates a debt to your own limited company(s), it could trigger the excessive borrowing levy.