General rules
According to the rule stipulated in Article 12a of the Wet op de loonbelasting Law, the salary of the director of the company, who is also its shareholder (at least 5% of the shares), must be:
- At least 46 euros per year;
- Not less than 75% of the average market salary of an employee in a similar position, for which data are taken from statistics on the labor market in the Netherlands;
- Not lower than the salary of other employees of the company.
It is possible to circumvent these rules and reduce the regular shareholder director (DGA) salary.
Often the director-shareholder is interested in donating part of his salary and investing this money in the development of the company. Or such thoughts may arise from the main shareholder of the company, who believes that he is paying his partner too much.
To reduce wages DGA there are usually several legal ways
- A person is part-time a shareholder or director in other organizations, then the salary level of 46 euros per year can be total for all companies.
- If the average market salary for a similar position is less than 46 euros, then set the salary level at 000% of this amount.
- Also, the reason for reducing the salary of a director-shareholder may be an exception for a new business, which allows for 3 years to lower the salary to the minimum. The same exception is the situation when the company incurs losses for several years, which makes it possible to reduce payments to the director-shareholder, but again not below the minimum level.
To use these methods to lower your salary, you must request a permit from the tax office and provide the necessary evidence.
Additional opportunity in 2020 due to Covid-19
Currently, the exception is the COVID-19 pandemic, as a result of which many companies really went into the loss zone.
If BV's turnover and liquidity have been severely affected by the coronavirus crisis, the main shareholder and / or director-shareholder may agree to temporarily reduce the monthly salary during the crisis year. The fact is that the company determines the regular annual wages for 2020 at the end of the year and indicates this on the tax return. Thus, for a major shareholder, it is possible to determine the normal salary for 2020 later, when it becomes clearer what impact the crisis had on the company.
If at the end of the year it turns out that the company was able to pay the standard salary amount, and it turned out to be below the established level, then this can be leveled off with the last salary for December.
If it turns out that the company has suffered due to the pandemic, then it is possible not to raise the salary to the standard, but to leave it in 2020 below the established indicator.
But, keep in mind that if you have not brought the salary for the year to the required indicator, then you will not be able to pay dividends.
Do not retroactively reduce
The salary that the shareholder director has already received in 2020 cannot be returned to the company. A reduction can only be negotiated for the remaining months of the year.
