There is no Dutch rule that a non-resident director must earn EUR 40,000 for the B.V. to have substance. A director holding 5% or more must receive a customary salary of at least EUR 58,000 in 2026 unless a lower amount is justified. The Netherlands usually taxes a director's pay from a Dutch company even if the work is done abroad, depending on the treaty. Tax residence and substance depend on where the company is really managed: Dutch-resident directors, decisions, office, bank and books.
The EUR 40,000 rule of thumb, and what is behind it
Founders who live abroad are often told that their Dutch B.V. is safe as long as the director is paid about EUR 40,000 a year through a Dutch payroll. The figure is not invented: it echoes the customary salary for director-shareholders, which stood at EUR 44,000 to 46,000 in the late 2010s, and what a part-time professional director typically costs. But it is not a legal threshold for substance or tax residence, and in 2026 it is below the statutory starting point of EUR 58,000 for a director-shareholder.
Three different questions get mixed up. First, how much must a director who owns the company be paid for Dutch tax purposes? Second, where is that salary taxed if the director lives abroad? Third, is the B.V. really managed in the Netherlands, so that it keeps its treaty residence, its residence certificate and its anti-abuse protection? A salary answers the first question, partly the second, and hardly the third.
DGA only
EUR 58,000 in 2026 for a director with 5% or more.
Directors' pay
The Netherlands taxes pay from a Dutch company, subject to the treaty.
Incorporation and management
Dutch by incorporation, but a treaty looks at effective management.
Facts, not salary
People, decisions, office, bank and books in the Netherlands.
The DGA rule: EUR 58,000 in 2026, also for non-residents
A director who, alone or with a partner, holds at least 5% of the shares in the B.V. and works for it is a DGA. The B.V. must then pay, or at least report as wages, a customary salary: the highest of EUR 58,000 (2026), the salary in the most comparable job, and the highest salary of other employees. Since 2023 the old 25% discount on the comparable salary is gone; a lower amount is accepted only with evidence, for example part-time work, a small loss-making start-up or a benchmark showing that the comparable job pays less.
The rule is domestic and does not depend on where the director lives. Whether the Netherlands can actually tax the deemed part of the salary of a director who lives abroad is a treaty question, decided by the Supreme Court in 2016 and analysed in the next section.
| Situation | Customary salary | Practical result |
|---|---|---|
| DGA working full time for the B.V. | EUR 58,000 or more | Dutch payroll with this salary as the floor |
| DGA working part time, documented | Pro rata, with evidence | E.g. two days a week can justify about 40% of a full-time comparable salary |
| Small start-up, loss-making | Lower, with evidence | Reviewed annually; keep the reasoning on file |
| Director without 5% shareholding | No statutory floor | Market fee agreed in the management agreement |
| Customary salary EUR 5,000 or less | Rule does not apply | Mainly for dormant holding companies |
Law and practice: Customary salary rule: article 12a of the Wage Tax Act 1964 (Wet LB 1964); the 2026 amount of EUR 58,000 is set annually; the 25% efficiency margin was abolished from 1 January 2023. Innovative start-ups using the R&D credit (WBSO) may pay the statutory minimum wage for up to three years.
Hoge Raad, 18 November 2016: the deemed salary stops at the border
The customary salary rule is a fiction: it treats as wages an amount the director never received. A fiction like that can shift income from the dividend article, where the residence state usually has the main taxing right, to the directors' or employment article, where the Netherlands taxes. The question whether a treaty partner must accept that shift reached the Supreme Court in a case about Portugal.
| Element | Detail |
|---|---|
| Judgment | Hoge Raad, 18 November 2016, case 15/04977, ECLI:NL:HR:2016:2497 |
| Taxpayer | Dutch national resident in Portugal; substantial shareholder and director of a Dutch B.V. recruiting and placing ICT specialists |
| Facts | Worked from the B.V.'s Dutch office while living in Portugal; for 2001 the inspector added a deemed salary under article 12a Wage Tax Act 1964 to his Dutch income tax assessment |
| Treaty | Netherlands–Portugal treaty of 20 September 1999, concluded after the Dutch rule existed |
| Court of Appeal | 's-Hertogenbosch, 17 September 2015: assessments upheld; the rule predated the treaty and was no unilateral treaty override |
| Supreme Court | Assessments reduced to nil; the Dutch fiction cannot be applied under the treaty |
The Court started from reciprocity and good faith: a treaty allocation rule cannot be stripped of its effect by a unilateral national provision. A domestic fiction that lets the Netherlands tax more than the treaty would otherwise allow can be applied only if the other state has recognisably accepted it, as shown by the negotiation history, a joint explanation or a protocol. That the rule already existed when the treaty was signed, or that Portugal knew about it, is not enough. Portugal has no comparable rule and had not accepted it, so the deemed salary fell away.
| Case | Treaty | Outcome |
|---|---|---|
| HR 9 November 2012, 11/02127 (BNB 2013/72) | Belgium, 2001 | Customary salary may be applied: the joint explanatory commentary shows both states intended it |
| HR 15 April 2011, 10/00990 (BNB 2011/160) | Belgium, 2001 (pension fiction) | Knowledge of a Dutch fiction during negotiations does not equal acceptance |
| Rb Zeeland-West-Brabant 24 August 2015, ECLI:NL:RBZWB:2015:5635 | Poland | No acceptance shown; customary salary not applied |
| HR 18 November 2016, 15/04977 | Portugal, 1999 | No acceptance; assessments reduced to nil |
What it means in 2026:
- The test is acceptance, not dates. The often-quoted split between treaties before and after 1997 is a shortcut. After 2016 the question for every treaty is whether the treaty partner recognisably accepted the Dutch customary salary rule.
- Actual pay remains taxable. The judgment removes only the deemed part. Salary that is really paid is still taxed under the directors' or employment article, usually in the Netherlands.
- The B.V. still runs payroll on what it pays. Withholding on a deemed amount that the treaty does not allow can be reclaimed, but it is cleaner to agree the position with the tax inspector in advance.
- Dividends move back into play. Profit not paid as salary is taxed as dividend: 15% Dutch withholding tax, often reduced by the treaty, and income tax in the residence state.
- No treaty, no protection. Where there is no treaty, for example with several Gulf and Central Asian states, the Netherlands applies the rule in full under domestic law.
- Document acceptance per country. Check the treaty, its protocol, the joint or national explanatory memorandum and Dutch parliamentary papers before relying on the judgment.
Law and practice: ECLI:NL:HR:2016:2497 (Portugal); ECLI:NL:HR:2012:BW4756 (Belgium, acceptance confirmed through the joint commentary to the 2001 treaty); ECLI:NL:HR:2011:BN8728 (knowledge is not acceptance); ECLI:NL:RBZWB:2015:5635 (Poland). Principles: articles 26 and 31 of the Vienna Convention on the Law of Treaties (good faith) and article 3(2) of the treaties (reference to domestic law).
A Portuguese-resident founder owns 100% of an Amsterdam B.V. and pays himself EUR 30,000. The inspector proposes a customary salary of EUR 58,000. Under the 2016 judgment the extra EUR 28,000 cannot be taxed as salary in the Netherlands; it stays in the company and, when distributed, is taxed as a dividend. For a Belgian-resident founder in the same position, the inspector can impose the full EUR 58,000.
Where a non-resident director's pay is taxed
Dutch law taxes non-residents on remuneration as director or supervisory director of a company established in the Netherlands, wherever the work is done. Treaties then decide whether the Netherlands keeps that right.
| Treaty position | Who taxes the salary | What the B.V. does |
|---|---|---|
| Directors' article covers executive directors (Dutch treaty policy) | The Netherlands, in full; the home country gives relief | Dutch payroll on the whole salary |
| Directors' article covers supervisory board members only | Employment article: the Netherlands taxes only days worked in the Netherlands | Payroll on Dutch workdays; keep a day count |
| No treaty | The Netherlands under domestic law; home country under its own rules | Dutch payroll; double tax possible |
| Home country without income tax (e.g. UAE, Bahrain) | Dutch tax is the only tax | Dutch payroll; no foreign credit needed |
Social security follows a different logic. A director who lives and works in another EU country normally stays insured there and needs an A1 certificate; without it, Dutch premiums may be due. For directors outside the EU, Dutch premiums are generally not due if the person neither lives nor works in the Netherlands, unless a social security agreement says otherwise.
Law and practice: Article 7.2(2)(b) of the Income Tax Act 2001 (Wet IB 2001) on non-resident directors; Dutch treaty policy (Notitie Fiscaal Verdragsbeleid 2011 and 2020) extends the directors' article to executive directors; EU Regulation 883/2004, articles 13 and 16, for social security and A1 certificates.
Dutch by incorporation, but where is it managed?
A B.V. is deemed resident in the Netherlands for corporate income tax simply because it is incorporated under Dutch law. That is why the Dutch tax authorities usually issue a residence certificate. The problem appears when another state also claims the company as resident because it is managed there. Treaties resolve this either by the place of effective management or, under the Multilateral Instrument, by agreement between the tax authorities; in the meantime treaty benefits can be denied.
Place of management is a question of fact: where the board meets, where the directors live and actually decide, where contracts are negotiated and signed, where the books and bank are run. A sole director in Dubai who signs everything there is a strong indication that the company is managed in the UAE, whatever the Dutch payroll says.
- Board composition. At least half of the directors resident in the Netherlands, with the knowledge and authority to decide.
- Decision trail. Board meetings physically in the Netherlands, minutes drafted and signed there, a decision calendar.
- Signing powers. Key contracts and payments approved in the Netherlands; no general power of attorney to a foreign shareholder.
- Records and bank. Books, archive and the main bank account in the Netherlands.
- Office. Own office or a dedicated workspace, not only a registered address.
Law and practice: Article 2(4) of the Corporate Income Tax Act 1969 (Wet Vpb 1969): incorporation fiction. Article 4(3) OECD Model and article 4 of the Multilateral Instrument (MLI) on dual-resident entities. Dutch case law treats the place of effective management as the place where the key management and commercial decisions are in substance made.
Where the substance tests really apply
| Purpose | Test | Role of the director's pay |
|---|---|---|
| Group financing or licensing company (service entity) | Formal list: half the board Dutch-resident, decisions and bank in the Netherlands, EUR 100,000 relevant wage costs, office for 24 months | The EUR 100,000 is a payroll for relevant activities, not one director's salary |
| Dividend withholding tax exemption for a foreign parent | Anti-abuse test: is the structure artificial? | Supports real activity; not decisive |
| Treaty benefits and residence certificate | Place of effective management, principal purpose test | Pay to a foreign director can point abroad |
| Advance tax ruling (APA/ATR) | Economic nexus: operational activities and staff in the Netherlands | Relevant wage costs proportionate to the functions |
| Bank account | Bank's own risk policy | Dutch payroll and director help the file |
The EUR 100,000 figure is the only salary-type number in Dutch substance rules, and it applies to service entities that mainly finance or license within a group. For an ordinary trading or holding company, there is no minimum payroll; the tax authorities and banks look at the overall picture. A Dutch-resident director paid a market fee usually weighs more than a non-resident director on a higher salary.
Law and practice: Article 3a of the Implementing Decree on International Assistance in Tax Matters (Uitvoeringsbesluit internationale bijstandsverlening): substance list for service entities, with the EUR 100,000 wage cost and 24-month office requirements added from 2021. Since 2020 meeting the substance list no longer gives a safe harbour against the anti-abuse rules for dividend withholding tax and foreign substantial shareholders; the tax inspector can still prove abuse. Ruling policy since 1 July 2019 requires economic nexus with the Netherlands.
A founder living in Dubai owns 100% of a Rotterdam trading B.V. and is its sole director. The B.V. pays him EUR 40,000 through a Dutch payroll. Problems: as a DGA his customary salary is EUR 58,000 unless he documents a lower comparable salary; and the company is in fact managed from Dubai, so under the treaty it risks being resident in the UAE. Fix: appoint a qualified Dutch-resident co-director, hold board meetings in Rotterdam and justify his own salary by a benchmark for his actual role and hours.
A German resident with no shares is managing director of a Dutch B.V., working from Düsseldorf three days and from Amsterdam two days a week, paid EUR 90,000. No customary salary rule applies. If the treaty's directors' article covers managing directors, the Netherlands taxes the whole salary and Germany gives relief; otherwise only the Amsterdam days are taxed in the Netherlands. Social security: an A1 certificate from Germany if the work there is substantial.
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Enter the planned salary and answer six questions. You see whether the customary salary rule applies, where the pay is taxed and how your setup holds up on substance and tax residence.
It is a rule of thumb, not law.
Lower only with evidence.
Directors' or employment article.
Decisions and people in the Netherlands.
Non-resident directors of Dutch companies: frequent questions
Is there a minimum salary for a director of a Dutch B.V.?
Not for directors as such. The customary salary rule applies only to a director who, alone or with a partner, holds at least 5% of the shares (a DGA) and works for the company. For 2026 the starting amount is EUR 58,000 a year, or the salary of the most comparable job or the highest-paid employee if higher. A lower amount is possible with evidence that a comparable job pays less.
Does paying a non-resident director EUR 40,000 give my B.V. substance?
No. Salary is evidence of real activity, but substance and tax residence depend on where the company is actually managed: who takes the decisions, where, and with what competence and resources. A salary paid to a director who manages from Dubai or Moscow supports the case that the company is managed there, not in the Netherlands.
Is my Dutch B.V. tax resident in the Netherlands if all directors live abroad?
Under Dutch domestic law, yes: a company incorporated under Dutch law is deemed resident in the Netherlands for corporate income tax. Under a tax treaty, however, the company may be treated as resident only in the other country if its place of effective management is there, which can cost it treaty benefits and its Dutch residence certificate.
Can the Netherlands tax the customary salary of a DGA who lives abroad?
Only for the salary actually paid, unless the residence state has recognisably accepted the Dutch rule. In its judgment of 18 November 2016 (ECLI:NL:HR:2016:2497) the Supreme Court held that a domestic fiction cannot shift taxing rights under a treaty without such acceptance. Mere knowledge of the Dutch rule during negotiations is not enough. Acceptance is established for the 2001 treaty with Belgium.
Where is a non-resident director's salary taxed?
The Netherlands taxes remuneration of a director of a Dutch company even if the work is done abroad. Under a treaty, the directors' article often lets the Netherlands keep that right; Dutch treaty policy extends it to executive directors, but not every treaty does. Where the treaty only covers supervisory board members, the employment article applies and the Netherlands may tax only the days worked in the Netherlands.
Must the B.V. run a Dutch payroll for a director who lives abroad?
Usually yes, if the Netherlands has a right to tax: the B.V. registers as an employer, withholds Dutch wage tax and files monthly payroll returns. Social security normally follows the place of work; within the EU an A1 certificate from the home country confirms that the director is insured there.
What are the Dutch substance requirements?
There is no single legal test for every company. A formal list exists for group financing and licensing companies: at least half of the qualified directors resident in the Netherlands, decisions taken there, a Dutch bank account, books kept in the Netherlands, at least EUR 100,000 of relevant wage costs and an office available for at least 24 months. For other purposes, such as treaty and anti-abuse tests, the same factors are used as evidence.