Compensation in Divorce for DGA's in Utrecht
In a divorce where one or both partners are director-major shareholder (DGA), specific legal and financial challenges arise. Dividing pension rights and business assets requires a detailed approach, especially since the DGA pension and the value of shares in a BV often form part of the marital property. This guide provides insight into compensation arrangements for DGA divorces in Utrecht, based on the Wet verevening pensioenrechten bij scheiding (Pension Equalization upon Divorce Act, Wet VPS) and relevant provisions from the Dutch Civil Code.
What Makes a DGA Divorce So Complicated?
A DGA is someone who is both director of a private limited company (BV) and holder of 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 own BV
- Other assets such as real estate or savings
The complexity lies in the different fiscal and legal treatments of these asset components compared to standard pensions or employment income.
Legal Framework for DGA Divorces in Utrecht
Wet VPS and Pension Division
The Wet VPS regulates the division of pension rights accrued during the marriage. For DGA’s, article 2 of this act provides that the old-age pension accrued during the marriage must be divided equally, unless otherwise agreed.
Dutch Civil Code (BW) and Asset Division
According to article 1:141 BW, the marital community is divided. In the case of matrimonial property conditions with periodic equalization, the value increase of the business assets during the marriage must be taken into account.
Fiscal Regulations
Fiscal consequences are determined by the Income Tax Act 2001 and the Corporate Income Tax Act 1969. Distributions or buy-out arrangements from the BV may have tax implications for both parties.
Compensation Options for DGA’s
1. Pension Division in Accordance with Wet VPS
The DGA pension accrued during the marriage is divided according to the Wet VPS. The non-DGA partner is entitled to 50% of the accrued rights, with two options:
- Regular Equalization: The ex-partner receives his/her share upon retirement
- Conversion: The rights are converted into an independent pension scheme with another provider
2. Buy-Out as an Alternative
Parties may opt for a one-time buy-out, whereby the DGA pays a lump sum to the ex-partner. However, this has fiscal implications that must be carefully weighed.
3. Equalization of Business Assets
If the value of the BV has increased during the marriage, this increase can be equalized, depending on the matrimonial property conditions. In the case of community of property, this automatically falls under the assets to be divided.
Practical Steps for Compensation Calculation
Step 1: Valuation of DGA Pension
An actuary determines the value of the DGA pension based on factors such as:
- The accrued reserve in the BV
- Fiscal old-age provisions (FOR/VPV)
- Expected returns and life expectancy
Step 2: Determining Marriage Duration
Only the pension accrued during the marriage is divided. The fraction calculation is: marriage years / total accrual years.
Step 3: Determining Compensation Amount
The final amount is actuarially calculated based on half of the rights accrued during the marriage.
Help in Utrecht: Court and Legal Aid Office
For legal support in DGA divorces in Utrecht, you can go to the Rechtbank Midden-Nederland, located at Vrouwe Justitiaplein 1. In addition, the Juridisch Loket Utrecht, located at Catharijnesingel 55, offers free advice and guidance in divorce cases.