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Written by:
Marcel Frazer


Director-cum-controlling shareholder of Belgian private limited-liability company

According to the Advocate General to the Netherlands Supreme Court, the Dutch tax authorities were right to levy tax on the salary of a Belgian-resident director-cum-controlling shareholder of a “BVBA” (private limited-liability company) incorporated under Belgian law which had been rendering services, in the Netherlands, to a Dutch-based “BV” (private limited-liability company). It was the BVBA’s director-cum-controlling shareholder (who was liable for personal income tax in Belgium) by whom the duties in question had effectively been performed. According to the (Dutch) Advocate-General the notional salary regime forming part of the Dutch payroll tax system was rightly applied. 

The Belgian-Dutch double taxation convention allows the Netherlands to charge tax on the income of any Belgian resident who during the relevant calendar year has spent 183 days or more in the Netherlands (the tally is not confined to work days, the sole criterion being that of the person’s physical presence in his or her work state). Neither the District Court nor the Court of Appeal had established at the time whether this requirement had been met; they had settled for calculating the number of work days – which, as it happened, had been fewer than 183 – which the director-cum-controlling shareholder had totted up. This has now prompted the Advocate General to move that the matter be referred for further adjudication where this aspect is concerned.

According to the Advocate General, “wage” has to be interpreted as “wage for payroll tax purposes”, and therefore includes notional wage. The notional salary regime applies to any employee who is the holder of a substantial interest as defined in the Netherlands Income Tax Act 2001. The substantial interest regime applies to participating interests in any company (part of) whose capital has been divided into shares. According to the Advocate General neither the wording of the Act nor parliamentary history prompts the conclusion that the company in question should be one that has been incorporated under the laws of the Netherlands: a Belgian BVBA too qualifies as a company (part of) whose capital has been divided into shares. It follows that the wage earned by the BVBA’s director-cum-controlling shareholder, as the holder of a substantial interest in the company, for Dutch payroll tax purposes is to be determined on application of the notional salary regime given that he is the holder of a substantial interest in the relevant company.

Dutch version: Dga van Belgische bvba

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