![\"\"](\"https:\/\/vwg.nl\/wp-content\/uploads\/20200205_aangiftetermijn-schenkbelasting.jpg\")
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If a director and major shareholder (DGA) borrows money from the private limited company (BV), interest must be paid to the BV. After all, the DGA and the BV must deal with each other on an arm\u2019s-length basis. But exactly how much interest must be paid?<\/p>\n
That depends, of course, on all the circumstances in each specific case. The Supreme Court<\/a> stated as early as 1997 that, in this situation, the private limited company should not be compared to a bank, but to a private investor.<\/p>\n A case was recently heard at The Hague District Court case<\/a> in which an interest rate of 4% was deemed to be at arm\u2019s length. This case concerns a debt owed to the private limited company of just over \u20ac1.8 million as at 1 January 2014 and nearly \u20ac950,000 as at 31 December 2014.<\/p>\n In its 2014 corporation tax return, the private limited company includes \u20ac8,132 in interest in its profit. This equates to an interest rate of approximately 0.6%. The tax authorities have adjusted this to 4% (\u20ac37,370).<\/p>\n According to the court, the private limited company must be compared to a private investor who lends money to a third party. This loan must be comparable, in terms of its size, term and risk, to the loan that the private limited company grants to the director and major shareholder.<\/p>\n The Tax and Customs Administration has demonstrated that the rate of 4% meets this requirement. The Tax and Customs Administration\u2019s reasoning is that this rate is aligned with the interest rate on government bonds, which stands at 1.7%. This is regarded as the interest rate for a completely risk-free loan. A risk premium of 2.3% is applied to this interest rate. The methodology used by the Tax and Customs Administration has been made public following a WOB request<\/a>.<\/p>\n In its judgment, the Court notes that the shares in the private limited company cannot serve as security for the loan. After all, that would mean that the private limited company would be acting as guarantor for its own funds.<\/p>\n Of course, opinions may differ on this. After all, a debt can be repaid by offsetting the repayment against a dividend payment from the private limited company.<\/p>\n It is well known that both the Ministry of Finance and the Tax and Customs Administration view it as a thorn in their side when directors and major shareholders (DGA\u2019s) borrow large sums from their private limited companies. Combating this type of (alleged) abuse is very time-consuming for the Tax and Customs Administration.<\/p>\n It has therefore been proposed that, in cases of excessive borrowing, the excess portion of the loans should be subject to income tax (Box 2). In this context, the total amount of debt exceeding \u20ac500,000 (plus the mortgage on the owner-occupied home) is deemed to be excessive.<\/p>\n The date on which this bill is due to come into force has now been postponed to 1 January 2023. The text of the bill was due to be published before Parliament\u2019s summer recess.<\/p>","protected":false},"excerpt":{"rendered":" Als een DGA geld leent van de BV moet rente aan de BV worden betaald. DGA en BV moeten immers zakelijk met elkaar handelen. Maar hoeveel rente moet er dan precies worden betaald? De BV is geen bank Dat hangt natuurlijk af van alle omstandigheden in elk concreet geval. De Hoge Raad heeft daarvan al […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-953","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts\/953","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/comments?post=953"}],"version-history":[{"count":0,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts\/953\/revisions"}],"wp:attachment":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/media?parent=953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/categories?post=953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/tags?post=953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Business interest rates<\/h4>\n
Shares as collateral<\/h4>\n
Excessive borrowing<\/h4>\n