Is your BV unable to pay VAT, payroll tax, employee insurance contributions and/or pension contributions, or unable to pay them on time? If so, it is wise to report payment default to the Tax and Customs Administration within 2 weeks. This also applies (of course) to directors of other legal entities.
Directors' liability
If you make this notification too late or not at all, the Tax Authorities can quite easily hold you liable as director of the BV for the unpaid VAT and/or payroll taxes (directors' liability). This is because the law then presumes that improper management is the cause of the non-payment or late payment of tax. You can raise a defence against such liability, but if you have not reported, or have not reported on time, a burden of proof almost always falls on you.
In practice, reporting is still sometimes omitted or delayed. Arguments we then hear in practice include:
- “It's only temporary, next week there will be money again.”
- “I don't want to do unnecessary reporting, it looks so bad,” he said.”
- “My accountant will pick this up.”
- “We will first wait and see how the cash flow develops,” he said.”
But delaying or failing to report could cost you dearly. You then risk being held liable with your private assets as a director.
EU court
There was still some hope for some kind of escape, but it was killed off by the European Court of Justice in November 2024. The EU court then ruled that the Dutch rules on directors' liability and notification of insolvency do not violate the principle of proportionality applicable under European law. As such, European law does not provide any protection or opening for any leniency.
What is expected of you
We explain the rules on directors' liability and notification of insolvency in our factsheet Notification of inability to pay.