Borrowing money from your own private limited company: here is everything you need to consider

Borrowing money from your own private limited company is permitted, but it is a loan—not a gift. Structure the loan commercially with a market-rate interest and repayment schedule; otherwise, the tax authorities will quickly view it as disguised dividend or salary. Furthermore, take into account the rules regarding excessive borrowing from your own company.

Borrowing from your private limited company is permitted

If you have your own private limited company (BV), you can borrow money from it for private use, for example for a car or a home. However, it remains a loan that you must repay. The Tax and Customs Administration sets conditions, because a loan that is not actually a loan can be taxed as dividends or salary.

Record the loan as a business asset

Treat yourself like a regular bank customer: draw up a written loan agreement with a market-rate interest, a repayment schedule, a term, and collateral if necessary. A loan without interest or principal repayment, or one without ever making repayments, is non-commercial and raises tax issues.

Pay attention to the rules regarding excessive borrowing

There are rules against excessive borrowing from one's own company: if you borrow above a certain threshold, the excess may be taxed as income. An exception applies to home ownership debt under certain conditions. (The threshold and conditions may change; consult your tax advisor about this.)

Consider the consequences for the private limited company

A loan withdraws liquidity from your private limited company. Ensure that the company can continue to meet its obligations and that its creditors are not disadvantaged; otherwise, you risk liability as a director. Document the decision-making process and maintain a professional relationship.

Frequently Asked Questions

Am I allowed to borrow private funds from my private limited company?

Yes, provided you structure it commercially with market-rate interest and repayment and actually repay it. Otherwise, the tax authorities may tax it as dividend or salary.

Is there a limit to how much I can borrow?

There are rules against excessive borrowing: above a certain threshold, the excess may be taxed, with an exception for home ownership debt. Discuss this with your tax advisor.

Am I at risk as a director?

Yes, if the loan puts the BV in trouble or disadvantages creditors. Keep the company healthy and document the decision-making.

Want to properly arrange a loan with your private limited company?

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