Directors’ Liability Under EU Law: A Wake-Up Call for Small Business Owners

The Ruling You Cannot Ignore

On 11 July 2025, the Dutch Supreme Court confirmed that Article 36(4) of the Invorderingswet 1990 (IW 1990), the Dutch directors’ liability scheme for unpaid tax debts — does not violate the EU principle of proportionality. This follows the Court of Justice of the European Union’s judgment of 14 November 2024, which reached the same conclusion.

In plain terms: if your company fails to pay certain taxes, you as a director can be held personally liable and the law, both Dutch and European, says this is not excessive.

Why This Matters for Micro and Small Companies

This is not an abstract, “big corporate” legal technicality. For micro and small companies, where the director is often the founder, the family breadwinner, and sometimes the only decision-maker, this ruling hits close to home.

Here are the practical implications:

1. Personal Risk Is Real
   If the company cannot pay tax debts (such as payroll tax or VAT), the Tax Collector can go after your personal assets. Your house, savings, and private investments are potentially at stake.
2. No Balancing of Interests
   The Supreme Court made it crystal clear: the Tax Collector does not have to weigh your personal circumstances or intentions. Financial hardship, illness, or bad luck in the market do not reduce your liability under this article.
3. Single Director Exposure
   In the case examined, only one director was targeted for a set of unpaid tax debts. That’s legal. There is no obligation to spread liability across all directors if the Collector chooses otherwise.
4. Multiple Directors? No Escape Clause
   Even with several directors, the Tax Collector has no legal room to “divide the blame” or decide who deserves more leniency. This is by design, and only Parliament could change it.

The Silent Risk in Small Companies

Small business owners often blur the lines between personal and company money. That might feel harmless in good times, but in tax debt situations, it’s lethal. If you think of the company bank account as “your” money, you risk making payments to suppliers, staff, or even yourself, while leaving taxes unpaid. That’s exactly the scenario where directors’ liability bites the hardest.

What You Should Do Today

To avoid becoming the next cautionary tale, there are three immediate steps every small business owner in the Netherlands should take:

1. Treat Taxes as Untouchable
   VAT, payroll taxes, and other government levies should never be delayed to pay other bills. These debts are the fastest route to personal liability.
2. Document Notifications and Decisions
   If your company faces liquidity issues, notify the Tax Office in writing within the legal deadlines. Failure to notify correctly can make liability automatic.
3. Separate Your Roles
   Even if you are both owner and director, act as if the director role is a separate legal persona. Your job is to protect the company’s compliance first, and your personal interest second.

The Bottom Line

The law is not on your side if you fall behind on tax debts. The Supreme Court and the EU have spoken with one voice: directors’ liability is a proportionate measure. For micro and small companies, that means there is zero room for complacency.

Your compliance habits are your shield. Ignore this, and your company’s debts can quickly become your debts, with no second chances.