Minimum salary shareholder director is a topic that needs to be addressed the moment a shareholder director operates in the Netherlands. In this case that was not done. Costly mistake.
Minimum salary shareholder director
In the financial year of 2023 the minimum salary is EUR 51.000. For 2022 that was EUR 48.000, for the year 2021 that was 47.000. For the years 2017 and 2018 the amount was EUR 45.000. This article is about a situation in 2017 and 2018.
Investment BV – court case
An Investment BV with one shareholder director engaged some rental agreements with tenants. From what we understand from the court case, that was it. However, no payroll was set up for the years 2017 and 2018. The director of this investment BV was paid by another company. That other company did not charge the payroll costs to this investment BV.
The tax office
The tax office issued for the year 2017 a EUR 5.625 wage tax correction. For the year 2018 an EUR 22.500 wage tax correction. The penalty for not having complied is 50% over both these amounts.
In appeal/court
The shareholder director argued these assessments with the fact that he was being paid. That had that other company done. Strangely enough that other company had not charged these payroll costs to the investment BV. Hence the investment BV had not had the burden of a payroll. Hence no payroll.
The shareholder director did not argue in court that applying the full EUR 45.000 for the work done is not the normal salary. The normal remuneration is much lower, however, that point was not made.
The court maintained the EUR 5.625 and EUR 22.500 to be paid. The fines were reduced to 25% as no intentional argument was proven.
Minimum salary shareholder director
We are now in November 2023 and this 2017 correction is addressed by the court. Just to realize the time that is consumed with not paying attention to the details. The work done is of course mickey mouse, setting up a rent agreement. Hence a EUR 45.000 salary is too much. Sometimes you can substantiate that for placing only a signature on a contract a salary of EUR 5000 per year should be sufficient as well. Unfortunately that argument was not made in this case.
The tax office is formal in its standpoint, the court followed. The director shareholder could maybe have done a better job in this court case. Nor did it help that one of his other companies paid his salary, not to charge on some of these salary costs to this investment BV. Common accountancy practice. We think the whole point of this minimums shareholder director salary is overlooked.
Tax is exciting
We think tax is exciting. Addressing the minimum salary is part of our work, but so far we have not experienced many shareholders directors getting excited over this. Either your BV can pay the salary or cannot. And if the BV cannot pay the salary, is the BV the correct vehicle to operate in, we wonder.
The current EUR 53.000 salary is not extremely high, hence not being able to meet that minimum salary makes us wonder if the activities should not be done in a more simple one man company type of set up.
