Thanks so much Ruben!
On possible tax exemptions, the primary criterion I will not fulfil is the "time criterion", since we don't hit 1225 hours per year of effort. My interpretation was that this would render me eligible for most tax exemptions. However, it does seem that I will still be eligible for the SME profit exemption, which is not a trivial sum. Thank you for pointing me to this link - I had seen it before, but entirely missed the fact that this does not require a time criterion.
On exit tax - indeed, this is what I referred to, thanks again for the link, I had been unable to find this myself. Re: your question on costs - I talked to 2 tax lawyers. Their quotes for the advice and execution, of converting the legal structure from VOF to BV (based on their estimated range of effort required) was "3.5k - 8k EUR" and "3.8k - 9.4k EUR" respectively. These are separate to their charges for establishing a BV structure. The large quote is indeed what made me want to investigate this further. Based on your reaction, it might be good for me to approach a few additional tax lawyers for a quote. Would you have any recommendations?
Regarding the decision to convert from VOF to BV, my understanding was that I can make an appeal for the DGA to be significantly reduced from 56k, providing 2 reasons:
- my time investment is likely to be between 5-10% of a full-time employee
- the total profit of the company is anticipated to be lower than a DGA salary
.. do you feel this
The biggest benefits I saw in converting from VOF to BV were
(a) an overall reduction of income tax rate (with a VOF, every euro of profit is taxed at the highest bracket, since I also have a full-time job which pushes me into this bracket). This assumes however, a reduced DGA salary and my calculations also do not take the ~13.3% SME profit exemption
(b) separation of legal liability and limiting potential exposure (especially for circumstances I could not reasonably have foreseen) to the BV's operating funds.
(c) Easier re-investment: Since as a weekend project, I sometimes just don't have the time to work on this for weeks/months, delaying certain actions such as advertising campaigns, sometimes into the next year. I don't plan to withdraw dividends or take loans in the short- or mid- term; and was intending to ramp up this salary in a way that it doesn't jeopardize the actual running of the company.
The SME exemption (if I am eligible for it) could potentially change this calculation though. And of course, if the DGA salary reduction request is not accepted by the Tax Authorities, this would prove to be quite costly. I don't however think there is any way to make this request before the BV is established? I do have a revenue forecast for the next 12m and 24m (although ultimately just an estimate), so if there was a way to get some feedback from them before making the decision, that could be quite helpful.