Recently, the minimum "regular" salary for director / major shareholder (DGA) was raised. This year it has increased from € 45,000 to € 46,000. The last time such a change was made was in 2017.
Who is DGA?
A DGA (Directeur-grootaandeelhouder) is someone who works in a private company in a relatively high (often highest) position and owns a significant share of shares - has a significant interest.
The DGA must be paid the usual wages for the work it does. This rule is established to ensure that major shareholders do not pay themselves a penny in order to reduce the taxable basis.
What is the “normal” salary?
To understand what salary is "normal", the tax and customs administration analyzes the salary of an employee in the "most comparable position." This is someone who is in roughly the same position as the DGA and does roughly the same job but has no significant interest. Such an employee is not required to do exactly the same work. The salary of an orthodontist can, for example, be determined based on the salary of a dentist.
The minimum threshold for “regular” wages is € 46,000 this year, however, it may not always be used. If, after analyzing the labor market, it turns out that the “regular” salary exceeds € 46,000, then two options apply:
- Set salary at 75% of the employee's salary in the most comparable position
- Set a salary equivalent to that of the employee of the given company or related company who earns the most.
When can you earn less than € 46,000?
The DGA can charge itself a salary less than the minimum € 46, provided that it can prove that the lower salary is “normal”. This is possible, for example, using job vacancy data or other labor market data.
However, everything is not so simple here either. For example, if the DGA works at half the rate, this does not mean that it can automatically reduce the minimum threshold by half. He still has to prove to the tax authorities that the salary for the most comparable position is below € 46,000.
Extenuating circumstances
Structural loss
You can reduce "regular" wages if you can prove that the company will suffer losses for several years in a row, and this will jeopardize its survival. However, there are also two nuances here:
- You cannot set a salary below the legal minimum
- The poor financial position of the enterprise should not be associated with high debts of the main shareholder for current operations or with losses caused by intangible expenses.
Start-ups
If you work in a start-up, you can use the statutory minimum wage as your “regular” wage, but only for the first three years.
Publication Date: 10.02.2020
