Where do I put the DGA current account on the balance sheet?
As a receivable when the DGA owes the BV, and as a liability in the opposite case. Also assess term, interest and repayability.
Short answer
As a receivable when the DGA owes the BV, and as a liability in the opposite case. Also assess term, interest and repayability.
Basis: art. 2:370 and 2:375 DCC; Dutch Tax Administration (Belastingdienst), current account and loan
Is the current account a receivable or a liability?
Look at the current account from the BV's side. If the BV has advanced money to the DGA (director-major shareholder), it has, in principle, a receivable. If the DGA has paid business costs for the BV, the BV may have a liability. The name of the ledger account does not automatically say which side is correct on the balance sheet date.
Prepare a breakdown of the opening balance, private payments, business advances, repayments and interest. Reconcile it with the bank and the underlying documents. Check whether items are really settled on a temporary basis or in fact form a long-term loan. The Dutch Tax Administration makes this distinction explicit. A structural financing does not remain an ordinary current account just because it is called that in the books. Record business loan terms when the nature of the relationship requires it. Also look at the DGA's repayment capacity; a receivable that is not fully collectible calls for a different assessment than an available bank balance.
How do you break down the DGA's payments?
The well-known limit of €17,500 concerns a specific tax interest rule for small, short-term amounts that are settled back and forth. According to the Dutch Tax Administration, the balance must not exceed that limit at any time during the whole year. A low closing balance alone is therefore not enough. The rule does not apply to a genuine loan with, for example, an agreed long term. Nor does it mean that you may leave the balance out of the balance sheet. Assess interest and presentation separately. Seek tax advice if the balance fluctuates strongly during the year or rises structurally.
Classify the receivable or liability according to its nature and the applicable reporting rules. Art. 2:370 and 2:375 DCC set rules for receivables and liabilities, with simplifications depending on the size class. A contractual term may determine the classification as current or non-current. Do not write amounts off against equity without a basis just to make the balance sheet look calmer. Any dividend set-off requires its own decision-making and tax treatment. Make sure the current account breakdown matches the agreements, so that the financial relationship between shareholder and BV remains recognisable.
When does the €17,500 limit apply?
Have the DGA review the breakdown before completion, especially when business and personal payments have been mixed. Note points of discussion and resolve them with supporting documents. Calculate any interest according to the actual agreements and assess whether they are at arm's length. Keep the calculation and relevant contracts with the annual accounts. In the next financial year, check that the opening balance matches the final closing balance exactly. This prevents an old unexplained amount from being carried forward every year. A current account is a financial relationship that must be explainable, not a place to collect unknown entries.
Sources
Frequently asked questions
From whose perspective do you classify the balance?
From the BV's: an advance to the DGA is a receivable for the BV.
Is €17,500 a balance sheet exemption?
No. The limit relates to a specific tax interest rule, not to omitting the item.
What if the DGA has advanced money to the BV?
Then, on the BV's side, you assess a liability to the DGA.
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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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