With effect from 2024, the AB rate will be increased from 26.9% to 31%. Is it advantageous to still pay dividends in 2023?
Significant interest
AB stands for substantial interest. A substantial interest exists, inter alia, when you hold 5% or more of the outstanding share capital in an NV or BV or 5% or more of a share type. The income from such an AIF is subject to income tax in Box 2. It may be regular benefits (such as dividends), as well as disposal benefits.
That depends ....
On the face of it, the answer to the above question is, of course, a resounding yes. By still distributing in 2023, a rate advantage of 4.1% can be achieved compared to distributing in 2024. Insofar as the benefit from AB is less than €67,000 (tax partners €114,000), the situation is different because in this range, a lower AB rate of 24.5% will apply from 2024, so paying out dividends only in 2024 is actually more advantageous.
But even for AB benefits above €67,000 (€114,000), bringing the AB tax forward is not advantageous in all cases. This is because it has the disadvantage that the tax has to be paid (much) earlier. No return can then be achieved on this amount.
Suppose your BV has a value of €5,000,000 and this amount can and may be distributed to you by the BV. Then the AB claim will be €1,345,000 in 2023 and €1,545,645 in 2024. If, for example given your age, you foresee that the AB claim will (probably) have to be settled in one of the coming years, paying out a dividend in 2023 is advantageous. After all, you will then pay €200,645 less in AB tax.
But if settling the AB claim only comes up in, say, 15 years and you can realise 2% annual returns during that period, the AB claim of €1,345,000 will give you a gross return of over €465,000, of which about €260,000 remains after corporate and income tax. That is more than the rate advantage you can achieve by settling as early as 2023.
Another seven months
You have about seven months left in which to weigh up whether or not to have your BV pay dividends in 2023. VWG will be happy to help you with this consideration. In any case, it is wise to wait and see what plans the government comes up with on Budget Day 2023. After all, tariffs in the Netherlands are not set in stone.