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Managing director shareholder’s salary

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MFFA Belastingadvies | Tax Advice

Managing director shareholder’s salary

For managing directors holding a substantial interest (5% or more of the shares) in a Dutch BV, also known as director-owners, a special Dutch tax regime applies with respect to dividends, capital gains and salary. The so-called directeur-grootaandeelhouder (DGA) generally receives two kinds of income, passive and active, which are treated differently for Dutch tax purposes. Below we will outline the main characteristics and tax treatments from a Dutch tax perspective.

Wat is a substantial interest?

A substantial interest is an interest of at least 5% in a company owned by a person. The interests of tax partners are added together.

Interest can mean any of the following:

  • Share capital
  • Rights to acquire share capital
  • Rights to profit
  • Voting rights

Owning a substantial interest results in a tax rate of 25% on passive income derived from the substantial interest, such as capital gains and dividends, according to the Dutch personal income tax act.


What is a managing director shareholder?

A managing director shareholder is someone who holds a substantial interest and performs activities for the company as well. This director-owner does not only enjoy passive income, but a salary as well.

Salary of a managing director shareholder

There are basically two peculiarities with respect to the taxation of the salary of managing directors:

  • The employee social insurance premiums.
  • The amount of taxable salary.

A managing director shareholder does not have to pay employee social insurance premiums nor is covered by employee social insurances, such as unemployment and disability, if he cannot be dismissed other than by himself. This is the case if the managing director holds an interest of at least 50%.

To prevent managing director shareholders from only paying themselves by distributing dividends (taxed at 25% instead of a progressive rate of maximum 52%) there are special salary provisions.

Depending on the circumstances this salary is deemed to be:

  • at least €45.000 (in 2017).

However, if the usual salary paid for comparable activities (usual salary) is higher than €45.000:

  • 75% of the usual salary (with a minimum of €45.000), or
  • The salary of the employee with the highest salary.

Furthermore, if the usual salary is provable lower than €45.000, then the lower salary applies. However, this cannot be lower than €5.000.

The above gives a brief insight in the Dutch tax treatment of managing director shareholders with respect to different kinds of income. Please note that this applies to both Dutch tax resident and foreign taxpayers. The latter group may however be except from the usual salary provisions depending on the applicable tax treaty.

As managing director shareholder you may also entitled for applying the 30% ruling if you fullfill the criteria

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