DGA current account (rekening-courant DGA)
A DGA current account (rekening-courant DGA) is a running receivable or debt balance between a BV and its director-major shareholder (DGA).
What is the DGA current account?
A DGA current account (rekening-courant DGA) is a running receivable or debt balance between a BV and its director-major shareholder (DGA).
The BV and the DGA are separate parties. Record interest, term and repayment; assess the tax rules on excessive borrowing separately too. A withdrawal is not automatically a dividend.
How does it work?
If the BV pays a private account of the director-major shareholder, it acquires a receivable from him. In the annual accounts such a receivable is an advance to a shareholder (art. 2:370(1) DCC, under (e)) and, if he is also a director, a loan whose outstanding amount, interest, conditions and repayments go in the notes (art. 2:383(2) DCC).
For tax there are two limits. If the balance in the year exceeds € 17.500, interest is required on the whole amount. And whoever on 31 December owes more than the threshold to his own BV declares the excess in box 2: at the end of 2023 that threshold was € 700.000, from 2024 it is € 500.000. Debts of the fiscal partner and to other own BVs count; an amount that has already been taxed raises the threshold of the following year (Dutch Tax Administration (Belastingdienst)).
Example
On 1 January the current account stands at zero. In March the BV pays the DGA's income tax assessment of € 9.000; in May he pays back € 4.000; in October the BV pays € 3.000 for a private trip. Withdrawn is 9.000 + 3.000 = € 12.000, repaid € 4.000: at 31 December the BV has € 8.000 to receive. The highest balance was € 9.000, below € 17.500, so interest is not needed for tax purposes.
In the annual accounts
Receivable or debt on the balance sheet; related-party note where required.
Difference from dividend
A withdrawal on current account is a debt: the DGA must repay the amount and the BV keeps a receivable. Dividend is a definitive distribution from equity, for which a resolution of the general meeting and approval by the board are needed (art. 2:216(1) and (2) DCC).
Common mistakes
- Booking a private expense as business costs
- Letting the balance rise without an agreement
What to watch for
- Record interest, limit and repayment in writing; amounts advanced for more than a short time form a loan, which must meet arm's-length terms.
- Book private expenses on the current account, never on a cost account.
- Micro does not have to show the receivable separately and has no obligation to give notes (art. 2:395a(4) and (6) DCC); small entities do state the loan to the director. See DGA current account on the balance sheet.
Legal basis and source
art. 2:370 and 2:375 DCC
Frequently asked questions
Does the current account count towards the excessive-borrowing limit?
Yes. All debts to your own BV count, except own-home debts that meet the conditions. Receivables from the BV are not deducted from this.
Does the loan continue to exist if part has been taxed in box 2?
Yes. According to the Dutch Tax Administration (Belastingdienst) the loan continues to exist in full and the BV must keep charging interest on the whole amount.
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Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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