The fiscal responsibility of owning your own BV company is not always understood. Yes you pay your accountant to do what needs to be done. However, this does not dismiss you from your responsibilities.
Fiscal responsibility of owning your own BV company – court case
A shareholder managing director his tax returns showed employment income of EUR 32.749 and EUR 10.370 wage tax withheld. As this goes with income tax returns, initially the tax return as filed is accepted. Then if there is a problem with the check and balances of that tax return within the tax office, a questionnaire is send.
Not this time. This time immediately an audit was done by the tax office, as it turns out the shareholder managing director fabricated for the past couple of years his salary and withheld wage tax in the income tax return. During the audit it became clear he did pay himself, but this income was never processed as salary income. Hence no wage tax was withheld. The tax office charged the wage tax due plus 50% penalty.
The shareholder managing director went to court as he thought it was rather silly to charge wage tax over the salary whereas this income was already corrected in the income tax return. What does that mean? If you earn an amount of wage but no wage tax is withheld, then in the income tax return you are due the tax. This person however fabricated an amount of wage tax in the income tax return. That is corrected to nil, so then he paid the tax over the salary income. So why not compensate the wage tax with the income tax? The court ruled that he had been fraudulent, then no compensation rules apply.
The court had the opinion that the fiscal responsibility of owning your own BV company implies you very much know you have never paid wage tax. So claiming to have paid wage tax in the income tax return justifies the 50% penalty.
Fiscal responsibility of owning your own BV company – blaming the accountant
I am surprised this person did not pull the card of blaming the accountant. This is often stated by the client. The accountant is at fault as I do not know how to process the tax returns, for that I pay the accountant.
This argument is also not a valid argument. You as managing director shareholder are always the final responsible person. Moreover, you cannot own a BV company and state at the same time you have no interest in knowing anything about the obligations that come with owning a BV company. It is horse and carriage. Then blaming the accountant is much too easy, as the accountant will have address the topic and the client would have waived it. Fortunately in this court case, this easy non valid argument was not used.
Tax is exciting
We assist many BV companies with their tax affairs and the salary is always a topic of discussion. The Dutch Government has set rules to avoid misuse of the tax system. For instance, if you are the only person in the BV company, your salary cannot be less than 75% of the salary of a person in a similar situation. If you have been living long enough in the Netherlands, you have learned by now that nobody tells his salary and if they do, it is often exaggerated. Only the tax office knows, but they will not share this information. The rules then state the safest is, to avoid a huge penalty, to take 75% of the profit as a salary. Under the 30% ruling 100% salary is even better.