Borrowing from your BV: €500,000 is not a safe harbour

A Dutch private limited company — a besloten vennootschap, or BV — is a separate legal person. Even where one founder owns all its shares, the cash in the company does not become the founder’s personal cash. An owner-director, known in Dutch as a directeur-grootaandeelhouder (DGA), can borrow from the BV, but then decides for the company while receiving money privately.

That creates two reviews. One looks at aggregate borrowing for Box 2, the Dutch income-tax category for a substantial shareholding. The other examines the loan itself: term, interest, repayment, security, repayment capacity and the parties’ actual conduct.

Imagine that an owner borrows €480,000 from a holding BV to buy a second home. The agreement names an interest rate but has no realistic repayment schedule. The owner has insufficient free income to service the debt, and no security is created. Being below €500,000 does not repair those weaknesses.

The Dutch Tax Administration separately states that a loan must be repaid and be made on zakelijke voorwaarden — terms comparable to those accepted by independent parties. A loan can also become problematic where the written terms are not followed in practice.

The excessive-borrowing rule looks at debt to all BVs in the owner’s group. Debt of the tax partner and certain connected persons may also be relevant. A claim held by the owner against a BV does not simply offset the debt for this test.

Owner-occupied-home debt can be excluded when the conditions are met, including a mortgage right in favour of the BV; a separate qualification applies to pre-2023 debt. A ledger label saying ‘mortgage’ is therefore not evidence of the exception.

Where aggregate debt exceeds the applicable threshold, the excess may be treated as a deemed Box 2 benefit. The loan agreement itself does not disappear. The owner still owes the full principal, and interest, security and repayment obligations continue.

This matters before a business transfer or the founder’s death. The personal debt can affect the value of the shares, the BV’s liquidity, the estate division and the cash available to family members who do not work in the business.

Record the direction, purpose, outstanding principal, realistic source of repayment and security. Then add aggregate debt to all BVs and identify any exception on which the family expects to rely.

This is not yet a tax conclusion. It shows where accounting reconciliation, legal review of the agreement and security, and a separate Box 2 and family-liquidity analysis are needed.