Purpose or Panic?
The Excessive Borrowing Act (Wet excessief lenen bij eigen BV) was not born in a vacuum. It emerged from a legitimate concern: director-major shareholders (DGAs) who borrow millions from their own BV, enjoying private liquidity while postponing tax in Box 2 indefinitely.
So the State intervened. Not by improving clarity. But by criminalizing complexity.
As of January 1, 2023, any private borrowing from your BV above €700,000—directly or indirectly—is taxed as a deemed dividend. The aim? To block tax deferral by creating a threshold above which trust is no longer presumed.
But here’s the flaw: the law is broad—deliberately broad. It treats intent as irrelevant and economic substance as suspicious by default.
From Policy to Paranoia
The drafters of the Act anticipated creative tax advisors and "agile" DGAs. But rather than outsmarting them with principled rules, they cast a net so wide that even legitimate, non-abusive transactions are caught.
Take this example:
A DGA borrows from a private bank and provides personal BV assets as collateral. This is not enrichment. The BV is not losing money. Yet the Knowledge Group of the Belastingdienst suggests this triggers the law.
This interpretation is not only wrong, it is culturally corrosive. It reveals a shift from governing behavior to policing structure, without nuance or proportionality.
The Rise of the Rulebook Rookie
This brings us to a deeper problem. A new generation of tax auditors, trained more in checklists than in context, are rising inside the Belastingdienst.
Many lack the historical awareness of why rules exist. They treat the letter of the law as a fortress and ignore the purpose it was built to serve. They don't read tax positions—they scan them. They don’t assess intent—they flag deviations.
The result?
- A collapse in trust.
- An increase in legal conflict.
- A rupture in tax morality.
The taxpayer, once presumed compliant until proven otherwise, is now structurally distrusted. And every BV, no matter how well-behaved, is treated as a potential fraud risk—not a legitimate actor in the Dutch economy.
Systemic Fallout: GRC Lessons
From a GRC (Governance, Risk, Compliance) perspective, this law should have been an opportunity to create predictability, transparency, and shared language between the State and the business world.
Instead, it has:
- Obscured the line between abuse and strategy
- Delegitimized the internal financial autonomy of small business owners
- Triggered a rise in structural uncertainty, with no safe harbor guidance
- Empowered a generation of auditors who are not trained to interpret systemic intent
When structure overtakes substance, and policy forgets people, trust collapses—even when compliance rises.
The Xtroverso Position
We don't defend tax abuse. We defend tax culture.
The Excessive Borrowing Act must be enforced with integrity and interpretation—not just spreadsheets and suspicion.
We invite the Belastingdienst to reconsider the Knowledge Group’s stance on indirect borrowing and collateralization. Otherwise, a new wave of unnecessary litigation will emerge—litigation not born out of dishonesty, but out of semantic drift and structural rigidity.
The solution is not softer rules.
The solution is smarter auditors.
At Xtroverso, we don’t just see laws. We see what laws produce.
Clarity. Tension. Transformation. That’s our lens. That’s the standard.
And that’s why we speak up—before your trust becomes the next collateral.
Co-Founder of Xtroverso | Head of Ledger and Tax Compliance
Linda Pavan brings disciplined precision to Xtroverso, anchoring its financial, fiscal, and operational integrity. As a ZENTRIQ™ Certified Auditor, she translates complexity into clarity—ensuring every decision is traceable, compliant, and strategically sound. Her quiet rigor empowers businesses to act with confidence and accountability.
