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A current account is a running account between two parties — usually between a BV and its director-major shareholder, or between a holding company and an operating company. It is a convenient form of financing: money can flow back and forth flexibly without the need for a separate loan agreement each time. However, there are tax rules to follow: arm's length interest, market-based terms, and, since 2023, the excessive borrowing rule (loans exceeding €700,000 from a BV to a director-major shareholder are partially treated as dividends). Below is the essential information for directors-major shareholders.
The short answer
- What: revolving loan/account facility between BVs or between a BV and a director-major shareholder.
- Tax conditions: arm's length interest rate (market rate, ~5–7% in 2024-2025), written documentation, market-rate repayment.
- Limit: since 2023, a loan from a BV to a director-major shareholder exceeding €700,000 is largely treated as a dividend distribution (excessive borrowing rule, Art. 4.13, paragraph 4 of the Income Tax Act).
- Document: agreement, annual interest accrual, statement of changes in financial statements.
Current account between holding company and operating company
The most common form. The holding company has the surplus capital; the operating company borrows that for growth, inventory, or working capital. In practice:
- The holding company “lends” money to the operating company.
- Market interest rate — not too low (otherwise tax adjustment), not too high (otherwise disguised dividend distribution).
- Credit or pay interest annually.
- Repayment in a market-based manner (fixed schedule or upon liquidity).
This does not work for the participation exemption — interest is taxed in the holding company as regular income, deductible in the operating company. No exemption as with dividends.
Current account between BV and director-major shareholder
This is the area where the tax authorities keep a closer eye. A director-major shareholder can borrow money from his own BV — for example, for private purchases, real estate, or consumption. Points to consider:
- Business terms. Interest, repayment, security as an independent party would require.
- Written agreement. No verbal agreements — everything must be in writing during a tax audit.
- A maximum of €700,000 in total loans (all combined, incl. mortgage with own BV) since 2023. Above that, the excess is taxed as a dividend distribution in Box 2.
- Exception for owner-occupied housing: mortgage for owner-occupied housing does not count towards the €700,000 limit (provided conditions are met).
The excessive borrowing scheme (since 2023)
An important change: since January 1, 2023, Article 4.13, paragraph 4 of the Income Tax Act applies. A loan from a BV to its director-major shareholder exceeding €700,000 (reference date December 31) is taxed as a notional dividend distribution — Box 2 (31% in 2024 on the excess). The owner-occupied home is excluded.
Example: Director-major shareholder has a debt of €800,000 with their own BV (no primary residence). Above €700,000, €100,000 is taxed as dividend → €31,000 Box 2 assessment.
The scheme is intended to discourage “borrowing empty” from the BV — formerly a popular way to defer tax.
Practical tips
- Draft a loan agreement. Include interest, repayment, and terms. Update in case of major changes.
- Add annual interest: market rate — ask your accountant for the correct percentage.
- Keep an eye on the €700,000 limit for growing loans — potential distribution as a dividend in a lower Box 2 year.
- Document in the annual accounts: current account balance, interest credit, statement of changes.
- Discuss with your accountant in advance how to optimally structure large loans (utilizing the owner-occupied home exemption where possible).
Honest recommendation
A current account is a useful financing instrument, provided it is properly arranged from a tax perspective. The excessive borrowing scheme has limited the 'work without worries' option since 2023 — for director-major shareholders with larger loans, a consultation with a tax specialist is no longer optional. For loans up to approximately €500,000 with arm's-length terms, it is generally workable.
For the mortgage route: mortgage from holding company.
Frequently Asked Questions
A revolving loan or loan facility between two parties — usually between a holding company and an operating company, or between a BV and a director-major shareholder. Flexible, provided it is properly arranged from a tax perspective with an arm's-length interest rate and a written agreement.
Market rate — depending on the type of loan, collateral, and term. For 2024-2025, typically 5–7%. Interest rates that are too low are adjusted by the tax authorities; interest rates that are too high may be considered disguised dividends. Ask your accountant for the correct percentage.
Since 2023 (Art. 4.13, paragraph 4 of the Income Tax Act): a loan from a BV to its director-major shareholder exceeding €700,000 is partially treated as a dividend distribution in Box 2 (31% on the excess in 2024). Home mortgages are exempt. This is intended to prevent "borrowing into debt".
No, provided conditions are met. The home mortgage with your own BV falls under the exception and does not count towards the €700,000 limit. Conditions include: the mortgage is for a primary residence, a market-rate interest, and customary repayment. Have a tax specialist review it.
Highly recommended. During a tax audit, a written loan agreement is requested: interest, repayment, security, and conditions. Oral agreements are legally valid, but virtually worthless during an audit.
As a short-term or long-term receivable (in the holding company) or a liability (in the operating company or with the director-major shareholder). With interest accrual as income/expense in the profit and loss account. An accountant arranges the correct entry.
A current account receivable of the holding company from the operating company falls into the bankruptcy estate upon the bankruptcy of the operating company. The holding company is then an unsecured creditor — often receiving little to nothing in return. Risk diversification through a holding structure and collateral helps limit the effect.
