Minimum director’s salary and compulsory insurance premiums

Jan 1, 2023

If you found a BV in the Netherlands, you will become both its shareholder and its director. As long as you hold at least a substantial share interest (> 5%) in your BV while being a director, you will be considered a shareholding director, or “DGA” in Dutch. Dutch law states that DGAs need to pay themselves a minimum salary for their work as directors. This minimum is set at € 51,000 per year(2023). The reason for this minimum is simple: salary is heavily taxed (up to 49,50%, 2023). In addition to this, employer’s taxes are levied over the salary to cover for incapacitation and unemployment insurances (an additional 19%, 2023). Dividend payments are taxed lower (15% + 26,9%= 41,9%, 2023). Business owners mostly want to keep their salaries as low as possible and pay themselves dividends instead. The Dutch Tax Authorities consider this undesirable. In this article we explain shortly what’s going on here.

I’m setting up my own business, how can I still be an employee?

Even when you set up your own business, you’re going to be an employee in your own company. As a director you will hold all sorts of powers within your company, but at the end of the day you’re working under an employment contract and you’re subject to the rules of employment law, unless you choose for a personal holding (see next). Amongst others, this means that the employer (in this case: your company) needs to pay premiums for insurances over your salary and have a correct DGA employment contract in place. The difference with normal employment relationships is: you are on both sides of the table. Directors are appointed and fired by the company’s shareholders after all, and the director is a shareholder.

I set up my BV with a personal holding, which holds my shares and is a director of my company. That changes things, right?

Yes. When you have appointed your personal holding - and not yourself  - as a director of your company, you’re working under a management agreement. This is not an employment agreement but an assignment agreement. You pay a simple flat “management fee” to your holding, over which you don’t need to pay insurance premiums. This management fee is not subject to the DGA salary requirements (in principle). In your personal holding you will still need to pay yourself the minimum DGA salary in accordance with the cashflow you generate there. Be sure to make a correct management agreement between the operating company and your personal holding.

Are there any exceptions to the rule of compulsory insurance premiums?

Employer’s insurance premiums make sure that you, as an employee, are ensured against unemployment or income loss due to incapacitation. They are therefore not a bad thing per se. But if you want to opt out of the compulsory employer’s taxes, the Dutch DGA Regulation 2016 holds two major exceptions. Under this scheme a BV is exempt from employer’s taxes for its DGA if one of the following situations applies:

  1. If the DGA holds enough power within the general meeting of shareholders to block his/her own dismissal as a statutory director from the company, they will not be considered subject to employer’s taxes for you as a DGA. You need to look at the situation where everyone else in the meeting will vote for your dismissal, except yourself. Usually a majority of 66% in the general meeting of shareholders is required for dismissal of a DGA, which means a DGA is safe if they hold 35% or more.

  2. If all DGAs in the BV hold an equal amount of shares, the BV will not be considered subject to employer’s taxes for any DGA.

This means that as a DGA in your personal holding you are not obliged to take out insurance coverage against unemployment or income loss, as this falls under rule number 1 above. So if you set up a holding structure, the insurance premiums don’t come into the picture at all : not in the holding company and not in the operating company.

Is there any way I can lower the minimum salary of € 51,000 per year?

The standard method you see everywhere is: request a lower DGA salary level from the Dutch Tax Authorities. You accompany your request with a revenue prognosis of your BV. Although this is a feasible approach, remember that requests can be denied and then you’re actually stuck with a minimum salary. If you don’t meet the minimum then, you will risk fines. A better approach would be to just perform “zero”  payments and tax declarations each month. You cannot pay yourself money the BV doesn’t have and you’re not required to take out a loan to meet the salary demand. If at the end of the year your BV has turned a profit of € 50,000, the Tax Authorities require you to make a salary back payment of circa 70%, allowing for a reserve to be held. This approach is perfectly acceptable to the Tax Authorities. Just don’t try to fool anybody by giving yourself loans or dividend payments instead of performing salary payments. This will lead to fines.


The minimum director’s salary puzzles many starting entrepreneurs. It shouldn’t. If you just follow a few simple rules, you should be fine. Whether or not a company is obliged to pay employee’s insurance of its DGA depends on the legal structure that is put in place. It should be noted that neither option is necessarily right or wrong. This depends on your personal preference. If you don’t pay premiums, you are not covered in unfortunate situations when you just might need it. If you do this, make sure you have your financial planning in your personal holding in order.

Do you have any questions after reading this? Don’t hesitate to reach out.

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