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In my last +10m startup I received a management fee of 6000 euro's a month. It was considered by all investors as a normal salary. Yet it was the lowest in the company. And of course the tax authority asked us questions about it. Afraid that I would lower my salary to a minimum and receive high dividends. I am located in the Netherlands.

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Is lowering the salary and receive high dividends illegal in Holland?

(Disclaimer: not a founder or tax expert here)

There are a bunch of rules, all aiming at making sure as a company director you can’t qualify for any government benefits, and income is taxed in box 1 (income from employment) which has the highest rate.

First is a minimum of €45k, then you can’t be paid less than your highest paid employee, for an LLC you need to pay yourself at least 75% of profits. There’s probably more to stop creative accounting and ensure the first chunk of money is always taxed as personal income.

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