Borrowing from your own private limited company? Here's how it works!

As a director-major shareholder, borrowing money from your own BV is permitted, but under strict conditions. It must be business-like (market-rate interest, written agreement, repayment schedule), and since 2023, a limit of €700,000 applies, above which the loan is considered a disguised dividend distribution for tax purposes. Under certain conditions, an exception applies to mortgage debt for owner-occupied homes via a BV. Below: how to set it up, what pitfalls there are, and why Karim's accountant scrutinizes his current account every month.

The short answer

• Allowed: Director-major shareholder can borrow from their own BV, provided it is for business purposes.
• Business: written loan agreement, market-rate interest, repayment schedule, security.
• Threshold: borrowing > €700,000 (all loans combined) = notional dividend distribution (Excessive Borrowing Act).
• Exception: home ownership debt does not count under certain conditions.
• Current account: small fluctuating loans in director's account — under scrutiny by the Tax and Customs Administration.

Why borrow from your own private limited company?

For directors-major shareholders with a fully funded BV: instead of distributing dividends (paying 24.5-31% in Box 2), you can borrow money — no direct tax liability. Benefits:

• No 24.5-31% Box 2 as with dividends.
• Quickly available for private investment, mortgage, or consumption.
• Interest received by your BV is profit for the BV — subject to corporate income tax, but at a lower rate than Box 2.

Disadvantages:

• The loan must eventually be repaid (or distributed as a dividend).
• Excessive borrowing rule: > € 700,000 = directly Box 2.
• The Tax and Customs Administration scrutinizes business acumen closely.

Conditions for business

The Tax and Customs Administration assesses whether the loan is “business-related” — otherwise classified as a disguised dividend distribution. Requirements:

1. Written loan agreement: between director-major shareholder (private) and BV. No oral agreements.
2. Market-rate interest: comparable to what a bank would charge. For a mortgage-comparable loan: typically 3-5% depending on market interest rates.
3. Term and repayment: fixed schedule, or revolving current account under strict rules.
4. Security: for large loans — mortgage on a home, pledge on assets.
5. Actual repayment: no “paper” loan that is never paid off.

The Excessive Borrowing Act (since 2023)

Intended to prevent erosion of the Box 2 tax base. Operation:

• On January 1, the Tax and Customs Administration adds up all loans between the director-major shareholder (and partner, and children) and their own private limited company.
• Above €700,000 (threshold since 2024): the excess is treated as a notional dividend distribution.
• Directly on that, Box 2 — 24.5% or 31% depending on the amount.
• However: repaying before the end of the tax year prevents taxation.

Home ownership debt via BV excluded, provided that:

• Mortgage formally established on the owner-occupied home.
• Loan meets conditions of the Box 1 home ownership scheme.
• Registered in proper form.

Current account between director-major shareholder and private limited company

Many director-major shareholders have a current account with their BV — a fluctuating balance for private expenses paid by the BV or vice versa. This falls under lending rules:

• The balance on January 1 counts towards the €700,000 test.
• Interest must be calculated on the balance (market rate).
• In case of a debit balance (director-major shareholder owes money to the BV): pay interest to the BV.
• In case of a credit balance (BV owes to director-major shareholder): interest received from the BV.
• Recorded in the BV accounting system.

Karim's accountant tracks this account monthly — a balance of €700,000 on January 1 can lead to annual Box 2 tax.

When is borrowing wise?

Smart:

• Mortgage via own BV (under the home ownership scheme).
• Short-term bridging until actual dividend distribution.
• Investment that yields higher returns than the interest you pay to the BV.

Risky:

• Private consumption without a concrete repayment plan.
• Amounts far above €700,000.
• Non-commercial terms (no interest, no schedule).

Honest recommendation

Borrowing from your own BV can be smart — especially for a home mortgage or short-term bridging loans. Above €700,000: only with a solid plan to repay within a year or establish a permanent home ownership debt. Draft a loan agreement with a tax specialist or lawyer and review the current account annually. For Box 2 optimization combined with a dividend strategy: a good director-major shareholder advisor is not a luxury.

For other topics: substantial interest, BV taxes and customary salary for director-major shareholder.

Frequently Asked Questions