As a director-major shareholder (DGA), you not only own your company, but you also take charge of it. This brings with it responsibilities, including determining your own salary: the DGA salary. However, this salary is not just an amount you choose for yourself; there are ground rules you need to take into account. In this article, we explain what exactly a DGA salary is, how it is determined, and what factors affect it. This way you can be sure that you comply with the rules and are smart with your salary.
What is a DGA salary?
The DGA salary is the amount you pay yourself as a director-major shareholder. This amount must comply with the rules of the Tax Office and is also called the “customary wage.” Before 2024, there are specific guidelines you need to take into account as a DGA.
The DGA salary in 2024: What is the minimum?
The 2024 DGA salary must meet the “customary wage” standard, which means the salary must be in line with what someone in a similar position at another company would earn. The Internal Revenue Service sets annual guidelines for what constitutes a reasonable salary for a DGA. For 2024, the minimum DGA salary is set at €56,000 per year. In most cases, a DGA may not pay himself less than this set amount.
Factors affecting DGA salary in 2024
Determining your DGA salary requires careful consideration. There are a number of important factors to consider:
- Minimum DGA salary 2024: As mentioned, a DGA must pay himself a minimum of €56,000 in 2024, provided the company’s financial situation allows it.
- Comparable positions: The salary should be in line with what someone in a similar position at another company earns. This means that you should be able to justify your salary by looking at prevailing salaries in your industry and for similar responsibilities.
- Wages of employees within the company: If your company employs employees, your DGA salary must be at least equal to that of the highest-earning employee within the company.
As a DGA, you must award yourself the highest salary of these three options mentioned above: the minimum of €56,000, the salary of a comparable position, or the salary of the best-earning employee within your company.
What to do if the DGA salary in 2024 is too high for your BV?
If your limited liability company or holding company is struggling to pay out the set DGA salary in 2024, you can approach the Tax Office to request a reduction in the customary salary. This is possible if you can demonstrate that it is not financially feasible for your company to pay the full salary without jeopardizing your business. When making a request, it is essential to clearly demonstrate why the established DGA salary 2024 is too high for your company. Provide a clear justification with a complete overview of your company’s financial situation and expectations. This will allow the Tax Office to properly assess why a lower salary is appropriate in your case.
Dividend as smart alternative to salary
In addition to a salary, a DGA may choose to pay dividends. Dividend is a portion of company profits that is distributed to shareholders. This can be fiscally advantageous, as dividends are often taxed at a lower rate than earned income. Important to know: before you can pay dividends, the usual salary, including the minimum DGA salary 2024, must first have been paid. This prevents a DGA from paying less tax via a low salary and high dividend.
We are happy to help you
Determining the 2024 DGA salary is an essential part of running your own business, but it can also raise some questions. Our team of specialists will be happy to help you determine the right salary and support you in setting up an efficient payroll system. Simply schedule a no-obligation appointment with one of our specialists and find out how we can support you.
