The director of a private limited company (B.V.) may be held personally liable for tax debts unpaid by the company. For this to apply, there must be (manifestly) improper management, which is a contributing factor to the failure to settle the tax debts. If the tax authorities are notified in good time that the private limited company is unable to settle its tax debts (notification of inability to pay), the Tax and Customs Administration must prove that there has been (manifestly) improper management. In the absence of a timely notification of inability to pay, the burden of proof rests entirely with the director held liable.
The Arnhem-Leeuwarden Court of Appeal recently had to rule on the case of the director of two private limited companies. One of the private limited companies lent a total of €120,000 to the other private limited company for a period of just over a year, at an interest rate of 6%, without any security, to finance the development of a promising product. The borrowing private limited company failed to repay the loan and the lending private limited company was declared bankrupt. The bankrupt lending private limited company still owes over €300,000 in additional payroll tax assessments. The Tax and Customs Administration holds the director liable for this.
The Court agrees with this, including in respect of tax liabilities relating to the periods for which a timely notification of inability to pay had been made. According to the Court, the mere granting of the loan constituted improper management. The granting of the (relatively substantial) loan did not, in fact, form part of the normal course of business, and at the time the loan was granted, the lending company already had substantial tax debts. The loan was clearly risky and the director should have realised this, firstly because the bank was unwilling to grant credit and, secondly, because no security had been stipulated. According to the Court, this is not altered by the fact that the Tax and Customs Administration granted a payment arrangement after the loan had been granted.