Compensation in DGA Divorce in Amsterdam
A divorce where one or both partners are directors-major shareholders (DGA) involves specific legal and financial challenges. In Amsterdam, where many entrepreneurs and DGAs are active, it is important to properly arrange the division of pension rights and business assets. This guide provides an overview of the relevant legislation, such as the Pension Equalisation upon Divorce Act (Wet VPS) and the Civil Code, tailored to the situation in Amsterdam.
What Makes a DGA Divorce So Complicated?
A DGA is a person who is both a director of a private limited company (BV) and holds a substantial interest (at least 5%) in that BV. In a divorce, the following asset components are crucial:
- The value of the shares in the BV
- The DGA pension, often accrued within the DGA's own BV
- Other assets such as real estate or savings
The complexity lies in the unique treatment of these elements under both tax and civil law, which differs from standard pensions or employment income.
Legal Basis: Wet VPS and Civil Code
Wet VPS and Pension Division
Under the Wet VPS, pension rights accrued during the marriage must be divided. Article 2 of this act provides that the old-age pension of a DGA is shared 50%, unless otherwise agreed.
Civil Code (BW) and Asset Division
Article 1:141 BW regulates the division of the marital community. In the case of matrimonial property arrangements with a settlement clause, the value increase of the business assets during the marriage must be taken into account.
Tax Rules
The Income Tax Act 2001 and the Corporate Income Tax Act 1969 play a role in the tax consequences of distributions from the BV for both ex-partners.
Options for Compensation in DGA Divorce
1. Pension Division via Wet VPS
The DGA pension accrued during the marriage is divided. The non-DGA partner is entitled to half of these claims, with two options:
- Regular Equalisation: The ex-partner receives his/her share upon retirement
- Conversion: The rights are converted into an independent pension provision with an external insurer
2. Buyout as an Alternative
Parties may opt for a one-time buyout, where the DGA pays an amount in compensation for the pension rights. However, this has tax implications that must be carefully assessed.
3. Settlement of Business Assets
In the event of a value increase of the BV during the marriage, this may be settled, depending on the matrimonial property arrangements. In a community of property, this increase falls under the assets to be divided by default.
Practical Steps for Compensation Calculation
Step 1: Valuation of DGA Pension
An actuary determines the value of the DGA pension, taking into account:
- The old-age provision in the BV
- Tax reserves (FOR/VPV)
- Life expectancy and retirement age
- Expected returns
Step 2: Determining Marriage Years
Only the pension accrued during the marriage is divided. The calculation is done via the formula: Marriage years / Total accrual years.
Step 3: Determining Compensation Amount
The final amount is calculated based on the actuarial value of 50% of the rights accrued during the marriage.
Help in Amsterdam
For legal support in Amsterdam, you can go to the Amsterdam District Court (Parnassusweg 220) or the Amsterdam Legal Aid Office (Vijzelstraat 77) for advice on DGA divorces and asset division.