A Dutch tax position published on 3 August 2026 treats capitalised returns on cumulative preference shares as part of the lucrative-interest financing test. An investor’s priority claim can grow without a cash dividend. That can change the ratio for management equity.
Why this matters
Management may keep the same ordinary shares while the investor’s preference claim grows each year. At exit, the investor receives that larger claim first. The financing test in article 3.92b of the Dutch Income Tax Act can therefore change. Keep the tax file with the share price, funding, leaver clauses, transfer limits, management’s work, and the risk it accepted.
Example
In the published case, ordinary shares made up just over 10% of contributed share capital. A 12% return was credited to cumulative preference shares for one year. It was added to the preference principal and earned future returns. The ordinary-share portion then fell below 10%. No shares were issued and no cash was paid.
XTROVERSO tips
- Update the calculation each year. Record every preference return and state whether it increases the preference principal. Update the cap table and exit waterfall in the same annual file.
- Match the contract and accounts. Check the articles, shareholder agreement, annual resolution, ledger entry, and preference calculation. Each record should treat the credited return the same way.
- Keep the entry file complete. Retain management’s acquisition price, valuation, funding terms, tax treatment, and the commercial reason for the participation.
- Review the full tax file. Do not rely on the financing ratio alone. Check who could acquire the shares, management’s investment, leaver clauses, transfer limits, and the link with management’s work.
- Give the records an owner. Assign a manager or adviser to the annual reconciliation. This avoids rebuilding old calculations when a buyer, investor, or tax adviser requests the exit file.
If your preference balance has grown, we can review the contracts, calculations, and management equity file
The data, sourcing, and analysis behind this article were conducted by Linda Pavan. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan before publication.
References
- Belastingdienst Kennisgroepen - Bijgeschreven vergoeding cumulatief preferente aandelen en financieringstoets lucratief belang
- Taxence - Standpunt bijgeschreven vergoeding cumulatief preferente aandelen
- Belastingdienst - Private equity en fiscaliteit
- Belastingdienst Kennisgroepen - Financiering en beloningsoogmerk lucratief belang
- Belastingdienst Kennisgroepen - Te boek stellen van het lucratief belang
- Overheid.nl - Indirect gehouden lucratieve belangen en wetgevingsplanning
