Minimum salary managing director shareholder needs to go up. Most employees would be thrilled. But this employee pays himself.
Minimum salary managing director shareholder
Explaining self-employed entrepreneurs arriving from abroad starting their own Dutch limited liability company or BV company that they need to take out a minimum salary is a challenge. Slightly more intensive challenge than explaining the same to Dutch nationals in the same situation.
Low salary high dividend
Most clients we serve arrive from a country where the mantra is: low salary high dividend. Once there was a time we had the same.
In that time the shareholder waived his salary, he did not need any. Instead he received an awesome amount in dividend, less taxed than salary. But in the Dutch system a person with no salary is poor. For poor persons we offer tax credits and benefits. Rental benefit, health care etc. So the director with no salary but awesome dividend had rental support, health care support, childcare support. Actually meant for the poor. As we found that not fair, the minimum salary of the shareholder director was introduced. Set at a level that no tax credits could be used of the poor.
That is the cause of the minimum salary requirement.
The minimum salary managing director shareholder
In 2022 the minimum salary is EUR 48.000. There is a startup first three year lower minimum salary alternative. For that you need to meet the criteria for a startup company. If your company has been a loss making company for three years in a row, you are a structural loss making company. Then the salary could be set less as well.
Indeed, you make no profit, but also no loss. In that situation you are supposed to take out a EUR 48.000 salary. That part of this regulation we cannot explain either.
Is the EUR 48.000 the correct salary?
No, of course not. That would make it too easy. The EUR 48.000 salary is the bare minimum. The correct salary is the salary a person in a similar situation would earn, who is not the main shareholder in the company.
Not sure how familiar you are with the Dutch. No Dutch person will ever tell you his or her salary. Maybe if you google salaries you might find some, but if that information is correct nobody knows. Actually, that is not true. The Dutch tax office know of everybody exactly in the Netherlands what they earn. So it does not seem a fair fight with the tax office, hence it was decided on that you could be 25% under the similar salary. Or better said, your salary could be 75% of that of a person in a similar situation.
Change for the tax year 2024: No more 75%
In the tax year 2024 the minimum salary criteria change with respect to the 75%. As per that year the salary needs to be identical the salary of a person in a similar position.
Good Dutch tax advice makes that you need to google yourself, print or scan and save what you can find on your salary topic. Should the tax office ever challenge the salary you take out, you have arguments to the best of your ability.
That said. If your BV company makes EUR 350.000 profit and your salary is EUR 48.000, you should know that salary is not high enough. But what is high enough? EUR 150.000? Maybe yes. Either way, if you take out the EUR 48.000 salary and you fund your private spending with taking up money via current account from the business bank account. Your salary is not high enough. The current account is the first bookkeeping leger the Dutch tax office will inquire about, if your payroll is being audited.
Tax is exciting
We think tax is exciting. Putting an obligation on your that is hard or not possible to meet is not exciting at all. Our payroll team is eager to set with you a salary that could be a workable salary. Both for you and the Dutch tax office.