As a DGA (director-major shareholder) of a private or public limited company in the Netherlands (BV or NV), you have to pay yourself a DGA salary of at least €48,000 in 2022. If the BV or NV is profitable, the company can distribute some profit to shareholders through a dividend. Another option is to go for an extra salary. This article will explain what’s more fiscally advantageous: dividend or salary.
Is a dividend payment more beneficial than a salary increase?
As we mentioned, you have to pay yourself at least €48,000 as a DGA in 2022. If you reach this salary threshold and want some extra income, you can choose to pay this out through dividends or an additional salary.
If you opt for a salary increase, this is deductible for the BV or NV, so you do not have to pay corporate tax (vennootschapsbelasting) on this. Over dividends, the company has to pay corporate tax. Nevertheless, if you have a high income that falls in the second tax bracket, it is often more tax-efficient to pay out dividends. We explain it in the example below.
Calculation example dividend or DGA salary
Imagine that your salary as a DGA is €70,000, which means that the top of the salary is taxed at 49.5% in 2022.
>> Read more about the tax brackets and tariffs.
Option 1: additional salary. If you choose to pay out €30,000 as an additional salary, this is deductible for the BV. Therefore, there’s no need to pay corporate tax on this; only income tax. The net payment will be €15,150.
Option 2: dividend payment. If you choose to pay out €30,000 as a dividend payment, the BV/NV has to pay a corporate tax of (15% of €30,000) €4,500 on it. As DGA, you hold more than 5% of the shares, which means you have to pay tax in Box 2. Over the remaining amount, you pay (26.9% of €25,500) €6,859.50. This leaves you with a remaining amount of €18,640.50.
Conclusion. If your income falls in the second tax bracket, a dividend payment is most likely to be the most beneficial.
From 2024: two tax brackets in Box 2
As mentioned above, as a DGA, you own more than 5% of the shares and the dividend payment is therefore taxed in Box 2. The current tax rate is 26.9%. During the Spring Memorandum, the government announced that Box 2 will be divided into two tax brackets. On the first €67,000, you will pay 26% income tax. Over the excess, the tax rate will be 29.6%.
So, are you planning to pay out a large amount of dividend (more than €67,000)? It’s better to do this before 2024. Do you want to pay out a smaller amount? Then, you will save 0.9% dividend tax if you do this after 2024.
Dividend payment is not always fiscally advantageous
However, it could be the case that you are benefitting from the 30% ruling as a DGA. In this case, it is wise to calculate whether paying out dividends or increasing salary is beneficial.
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