Have you built up assets in your BV that you don’t need directly for business operations? If so, investing through your BV could be interesting. Instead of leaving the money in a savings account, you can put it to work for returns. Investing through a private limited company (BV) offers potential tax benefits, but also comes with important considerations. In this blog, you’ll read when business investing can be attractive, how it compares to private investing, and what you should pay attention to.
Why invest via your private limited company?
A private limited company (BV) not only provides protection against business risks, but also opens up opportunities for structured asset growth. Investing within your BV may be particularly attractive if:
- you have excess liquidity;
- you are aiming for long-term returns;
- you want to strategically deploy capital within the company.
Business investing vs private investing
As a director-major shareholder (DGA), you can choose to invest via your BV or distribute profits as dividends and invest privately. Both approaches have distinct tax implications:
Invest within your BV
- Investment profits are subject to corporate income tax (19% up to €200,000; 25,8% above that).
- Investment losses can be deducted from profits within the BV.
- Capital remains within your company, allowing flexibility for future investments or pension planning.
Investing in private (after dividend distribution)
- You first pay yourself dividends, which are taxed at 25.5% up to €67,000 and 31% above that.
- The assets then fall under Box 3, where they are taxed based on a deemed (fictitious) return (e.g. 6.04% in 2024). Note: this will be replaced by a system based on actual returns in the coming years.
- You are entitled to an exemption of €57,000 (or €144,000 with a tax partner).
Which route is more favourable depends on factors such as expected returns, asset size, and your financial goals. Generally, higher expected returns may make private investing more attractive, while investing through the BV can be more efficient for larger portfolios or when liquidity needs are low.
Investment options within your BV
Your BV can invest in more than just stocks. Consider options like:
- Real estate: Investing in residential or residential properties can be attractive, but requires clear documentation and professional valuation.
- Shares, ETFs or bonds: Suitable for long-term growth with diversified risk.
- Private equity or start-ups: Potential for high return, but usually carries more risk.
- Providing a mortgage to yourself as DGA: Your BV can lend you money to buy a home, provided the conditions are market-based and formally recorded.
Key points of attention
Investing through your BV requires a well-considered approach. Be aware of:
- Businesslike terms: Ensure all investments are made under market conditions to avoid tax issues.
- Excessive borrowing legislation: Since 2023, you may borrow up to €500,000 tax-free from your BV (excluding owner-occupied home loans). If you exceed this, this excess is taxed in Box 2. Loans to partners or close relatives may also count toward the threshold.
- Changing tax laws: Corporate tax, dividend tax and Box 3 regulations are regularly updated. What works today may be less favourable tomorrow.
What is the right choice for your situation?
Whether private or business investing is the better route depends on:
- the size of your available capital;
- your anticipated investment return;
- how much flexibility or reinvestment freedom you want;
- your personal financial goals and long-term strategy;
At Brand Boekhouders, we’re happy to explore the best approach for your business and personal situation. We support you with:
- scenario calculations
- correct bookkeeping;
- and well-informed financial decision-making
Want to learn more about investing through your private limited company? Get in touch for personal advice and discover how to grow your assets strategically.
