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Netherlands: Proposal countering excessive borrowing from one’s own company

Netherlands: Proposal countering excessive borrowing

An internet consultation on a draft bill to address excessive borrowing from one’s own company was launched this week.


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The bill reflects a proposal from last September’s budget day presentations. Under the bill, a “deemed benefit” would be treated as income in respect of certain holders of a “substantial interest” in a company and who borrow more than €500,000 from the company when the total amount of such loans (except for home acquisition debt) exceeds €500,000.

The government intends to use the measure to address the deferral of tax for individual (personal) income tax purposes and to bring taxation more in line with the time at which the substantial interest holders, or any person related to that person, actually has the funds at their disposal.

The bill identifies which loans qualify for this treatment, provides transition rules, addresses the treatment of existing loan agreements, and includes protective assessments for the profit from a substantial interest for substantial interest holders who emigrate.

If enacted, the measure would apply for the first time to the 2022 calendar year. Substantial interest holders who borrow more than €500,000 would need to review their positions before 2020.

Read a March 2019 report prepared by the KPMG member firm in the Netherlands

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