Loan Agreement DGA Ltd
A Ltd can provide a loan to its owner / director. The Loan Agreement Ltd must be properly drafted. Remember, the tax authorities keep a close eye on loan agreements DGA Ltd. The tax authorities may think it is not a loan agreement but an indirect dividend payment, especially when it concerns large sums of money. Don't let the tax authorities think it is an indirect dividend payment. Making clear agreements is therefore very important. You can use a model loan agreement standing right to record the agreements.
The Tax and Customs Administration sets conditions
Can money be borrowed from a Ltd? Yes, because a Ltd may invest its money as it sees fit. That is why it is also possible to lend money to the owner / director of a Ltd. The tax authorities agree with this, but it does set some conditions. For example, the interest to be paid by the director / owner must be in line with the market, ie not higher. than the interest charged by banks. Neither should the Ltd, now or in the future, be faced with liquidity problems.
What does the law say?
What does the law say about loans from the Ltd to the DGA? Loans with a DGA must always be recorded in writing, as can be read in the Civil Code. There are a number of agreements to be made. The interest must be acceptable and determined independently. Agreements must also be made about collateral and repayment.
Loan Agreement Ltd
Are you planning to borrow money from your Standing Right Ltd? It is recommended that a loan agreement Ltd be drawn up. The agreements made are recorded in writing in this loan agreement. The loan must meet the business conditions stated on the website of the Tax Authorities.
- The loan must be in writing.
- You must have made arrangements with the Ltd about repaying the loan. The number of installments, the amount that you pay per installment and the interest to be paid (monthly or annually) must therefore be recorded. The date by which the loan must be fully repaid must also be stated in the loan agreement.
- You must provide adequate collateral to the Ltd. A security is an equivalent collateral.
- You have agreed an arm's length interest with the Ltd. The commercial interest depends, among other things, on the interest that private investors receive on the market. The risk that you will not be able to repay the loan also affects the interest to be paid by you.
- The Ltd must be able to continue to meet its obligations when You take out the loan. Thus, among other things, the Ltd must be able to pay the rent, pay its employees and repay other loans in a timely manner,
- The question whether the Ltd would also have provided the loan to third parties, who are in similar circumstances, must be answered with 'yes'.
Loan Agreement Ltd example
Looking for a model loan agreement DGA Ltd? You will not find a model DGA Ltd loan agreement, also called Stamrecht loan agreement, here. These loan agreements can be found on the internet. You can download these loan agreements. Usually there are costs involved. You will find an example of a model agreement DGA and Ltd (free) on the Tax Tips site. After googling you can draw up a model loan agreement DGA Ltd for a modest amount or free of charge.
New law makes borrowing from your own Ltd. less attractive
Borrowing money from your own Ltd will become less attractive in the future. The Cabinet is of the opinion that by borrowing money from your Ltd, and thus withdrawing money from the Ltd, taxation at that time is avoided. Therefore, a new law will most likely enter into force in 2022. Is the debt to your own Ltd more than $ 500,000? Then from 1 January 2022, 26.9% must pay tax on the debt in excess of the amount just mentioned.