Excessive borrowing from your own BV: the € 500,000 limit may drop to € 100,000
TGS Innovised — De Voorwaarts
Updated: 30 September 2026
- Do you and your tax partner together owe more than € 500,000 to your own BV(s) on 31 December? Then you pay box 2 income tax on the excess.
- The Dutch government plans to lower the threshold to € 100,000 in five steps from 2027. This is not yet law.
- An owner-occupied home loan does not count, provided the BV holds a mortgage right on the property.
- Map your position before 31 December and draw up a multi-year plan for repayment or dividends.
Many director-major shareholders (DGAs) of a Dutch private limited company (BV) borrow money from their own company: through a current account, for a home or for a private investment. Since 2023, the Dutch Excessive Borrowing from Own Company Act (Wet excessief lenen) limits this. Do you and your tax partner together owe more than € 500,000 to your own BV(s) on 31 December? Then you pay box 2 income tax on the excess, as if you had received a dividend. And that limit may drop sharply: the Dutch government plans to lower it to € 100,000 in five steps from 2027. This article explains how the excessive borrowing rules work, what the government is planning and what you can do before year-end.
Why was the Excessive Borrowing Act introduced?
For a long time, borrowing from your own BV was a way to access company profits without paying tax on a dividend. The Excessive Borrowing from Own Company Act (Article 4.14a of the Dutch Income Tax Act 2001, in Dutch) puts an end to this for large debts. The rules have applied since 1 January 2023. In 2023, the threshold was € 700,000; from 2024 onwards it is € 500,000.
Government proposal: excessive borrowing limit to € 100,000
At the end of September 2026, following budget talks with opposition parties, the Dutch government announced new plans. They include a gradual reduction of the threshold by € 80,000 per year:
| Reference date | Threshold (proposed) |
|---|---|
| 31 December 2026 | € 500,000 (current) |
| 31 December 2027 | € 420,000 |
| 31 December 2028 | € 340,000 |
| 31 December 2029 | € 260,000 |
| 31 December 2030 | € 180,000 |
| 31 December 2031 | € 100,000 |
At the same time, the government intends to temporarily lower the higher box 2 rate from 31% to 29.2% for the years 2027 to 2030. The aim is to encourage DGAs to distribute profits rather than borrow them. These plans come on top of the 2027 Tax Plan (in Dutch) presented on Budget Day.
How likely is the proposal to pass?
In our view, the reduction is likely to go ahead. The measure is part of the budget agreement between the government and opposition parties. Moreover, it affects a relatively small group of DGAs with large debts to their BV, so broad public resistance is unlikely: there is no large lobby group strongly opposing it, as there is for the box 3 wealth tax. Criticism from professional bodies and tax advisers is expected to focus mainly on the details, such as the pace, the transitional rules and the treatment of existing loans, rather than on the reduction itself.
How do the excessive borrowing rules work?
- Who? Anyone with a substantial interest (as a rule, at least 5% of the shares) in a BV. In practice, most DGAs.
- Reference date: the balance on 31 December of each year.
- Threshold: € 500,000 (lower from 2027 under the government proposal, see above) for you and your tax partner combined. Debts to all BVs in which you hold a substantial interest are added together.
- Consequence: the amount above the threshold is taxed as a deemed regular benefit in box 2 (income from a substantial interest). In 2026, the rate is 24.5% on the first € 68,843 (per partner) and 31% above that. For 2027, the bracket limit rises to € 69,607. Under the government proposal, the higher rate drops to 29.2% for 2027 to 2030.
- The loan still exists. You must still repay the debt, and the BV must continue to charge an arm’s length interest rate.
Which debts to the BV count?
In principle, all debts to the BV count, whether direct or indirect. For example:
- The DGA’s current account with the BV.
- Loans to you or your partner.
- Debts of related persons, such as children, parents and parents-in-law.
- A bank loan guaranteed by the BV, if you could not have obtained that loan without the guarantee.
Exemption: owner-occupied home loans
Debts relating to your owner-occupied home do not count, provided that:
- The debt meets the conditions for mortgage interest deduction in Dutch income tax.
- The BV holds a mortgage right on the property.
Transitional rules apply to home loans that already existed on 31 December 2022: no mortgage right is required for those. More information is available on the Dutch Tax Administration’s page Excessief lenen van bv beperkt (in Dutch).
Excessive borrowing: worked example (fictitious figures)
| Debt on 31 December 2026 | Amount |
|---|---|
| DGA current account | € 450,000 |
| Loan to partner | € 150,000 |
| Owner-occupied home loan with mortgage right for the BV | € 400,000 |
| Debts that count (excluding home loan) | € 600,000 |
| Threshold | € 500,000 |
| Deemed regular benefit in box 2 | € 100,000 |
If the entire benefit is allocated to one partner and there is no other box 2 income, the tax due is approximately € 26,500 (24.5% on € 68,843 and 31% on the remainder). Splitting the benefit between both partners can reduce this.
And if the government proposal goes ahead? Suppose the same debt of € 600,000 remains unchanged. In 2031, it would then be € 500,000 above the new threshold of € 100,000. How the reduction will interact with amounts that have already been taxed remains to be seen from the final legislation.
What happens in later years?
- No double taxation. The taxed amount increases your personal threshold. If the debt remains at € 600,000 in 2027, no further tax is due.
- Repayment does not lead to a refund. If you repay later, your threshold decreases again by the amount repaid (but not below € 500,000). The tax you have paid is not refunded.
- A higher acquisition price. The taxed amount increases the acquisition price of your shares. On a later sale or transfer, you therefore pay less box 2 tax.
- New from 2027 (proposal): if you inherit a substantial interest, a facility applies to distributions made within 24 months after death. Under the 2027 Tax Plan, this facility will not apply to deemed benefits from excessive borrowing. This prevents double taxation.
What can you do as a DGA before 31 December?
- Map your position. Add up all debts: your own, your partner’s and those of related persons, across all your BVs. Do not forget the current account; it often grows unnoticed.
- Check your home loan. Does the BV hold a mortgage right? If not, and the debt does not fall under the transitional rules, consider establishing a mortgage right.
- Repay or refinance. For example with a bonus or salary, a dividend distribution (you also pay box 2 tax, but the debt no longer remains), or a bank loan.
- Compare a dividend with the deemed tax. Sometimes it is more favourable to deliberately distribute a dividend and use it to repay the loan, for example to use the lower bracket of both partners. If the temporarily lower rate of 29.2% goes ahead, it may also be worth postponing a large distribution until 2027.
- Draw up a multi-year plan. Is your debt between € 100,000 and € 500,000? Then you are currently outside the scope of the tax, but you may not be if the proposal goes ahead. A repayment schedule that follows the declining threshold avoids surprises.
- Beware of artificial arrangements. Repaying just before 31 December and borrowing again in January may be challenged by the Dutch Tax Administration, for example under the doctrine of abuse of law (fraus legis).
- Keep loans at arm’s length. Put a written agreement in place with an arm’s length interest rate, a repayment schedule and security. This remains important below the threshold as well.
Our tip
Do not wait until December to review your current account. And do not wait until the lower threshold becomes law: if the proposal goes ahead, many more DGAs will be affected. An interim review in the autumn gives you time to choose calmly between repaying, refinancing or distributing a dividend. Also align your choice with the BV’s annual accounts: the accountant also assesses whether receivables from the DGA are recoverable.
Frequently asked questions about excessive borrowing
What is excessive borrowing from your own company?
Does my home loan from my BV count towards the threshold?
What is the excessive borrowing threshold in 2027?
Advice on excessive borrowing?
Would you like to know what the excessive borrowing rules mean for you? Contact our tax advisers. We will be happy to calculate the most favourable route for you, from repayment to dividend planning. See also our business tax services.