In a BV, dividends don’t live in the abstract. They land right in the middle of cash flow, invoices you still need to collect, supplier trust, payroll dates, VAT turns, and that one unexpected bill that always shows up at the wrong moment. A dividend is simply cash leaving the company. And once it’s out, your BV has less room to absorb late-paying customers, a tax assessment, or a quiet month.

Many entrepreneurs assume that if shareholders want a dividend, the company must pay. In a Dutch BV, that is not how it works. The general meeting of shareholders (the algemene vergadering, often “AV”) can decide that profit will be distributed, but that decision has no effect until the board approves it. If the board does not approve, there is no dividend, full stop. 

That’s also why shareholders cannot “force” the CEO/board to pay a dividend. The law puts the board at the gate because the board must protect the BV’s ability to pay its debts. The board is allowed to refuse approval only when it knows, or reasonably should foresee, that after the dividend the BV will no longer be able to keep paying its due and payable obligations. In plain language: if paying dividend would make tomorrow’s bills risky, the board must say no. 

This is where the two practical checks come in. First there is the “balance test” (balanstest): after the distribution, equity may not drop below the legal and statutory reserves. Then there is the “distribution test” (uitkeringstoets): a forward-looking reality check, will the BV still be able to pay its debts as they fall due? This second one is the one small businesses underestimate, because it’s not about last year’s profit; it’s about next quarter’s payments.

A concrete example I see often: year-end numbers look healthy, so the owner wants a dividend in January. Meanwhile, two big invoices are still outstanding, VAT is due, and there’s a lease payment coming up. On paper, the BV is “profitable.” In real life, the BV may be one delayed payment away from stress. The safest dividend is the one that’s timed after you’ve made a sober cash forecast that includes taxes, loan repayments, and a buffer for surprises, and that you can explain without waving your hands.

And if a BV does pay dividend while the board knew (or should have known) it would cause trouble, the consequences are not theoretical. Directors can be held personally liable for the shortfall that results from an improper distribution, and shareholders may be required to repay dividend they received if they knew or should have known the distribution was not allowed. That’s exactly why the approval step exists: to prevent “taking money out” from becoming “creating a hole.” 

My calm advice is simple: treat dividends like a serious contract with your future self. Keep the decision traceable (what did you assume about cash in, cash out, taxes, and upcoming commitments), consider a smaller or staged dividend instead of “everything at once,” and never let the calendar, year-end, holidays, pressure from the holding, rush the reality check. A BV that pays its bills on time buys something more valuable than a dividend: credibility. And credibility is what keeps your business flexible when life gets noisy.