Director's liability: when your BV does not protect you
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
As a BV director you become personally liable for manifestly improper management before a bankruptcy, where sloppy records or late annual accounts count as proof, for inability to pay payroll taxes or VAT that you do not report within two weeks, and for a dividend without a valid distribution test.
- Late annual accounts in the three years before bankruptcy shift the burden of proof to the director.
- The report of inability to pay must be made within two weeks of the payment deadline, and does not apply to corporate income tax.
- Before a dividend you test whether the BV can keep paying its due debts for about a year.
- Anyone who enters into obligations knowing the BV cannot meet them can be held liable by the creditor directly.
One of the best-known reasons for setting up a BV is that you are not liable with your private assets for your company's debts. With a sole proprietorship you are. But that protection is not absolute. As a director you have legal duties, and anyone who fails to meet them can still be held personally liable. Most cases are not about fraud, but about things left undone in a busy year: annual accounts filed late or a VAT debt not reported in time. This article covers the situations in which you become liable as a director and how to prevent that.
The starting point: the BV bears its own debts
A BV is a legal entity with its own assets. If the BV does not pay a bill, the creditor must go to the BV, not to you. That remains the case even if the BV goes bankrupt. Only in specific situations does the law make an exception, and then you become personally liable as a director.
| Situation | Who can hold you liable | For what |
|---|---|---|
| Manifestly improper management before bankruptcy | the receiver | the deficit in the bankruptcy |
| Inability to pay not reported or reported late | the tax authorities | outstanding payroll taxes and VAT |
| Dividend while the BV cannot pay its debts | the BV or the receiver | the shortfall caused by the distribution |
| Entering into obligations the BV cannot meet | the affected creditor | that creditor's loss |
On bankruptcy: records and annual accounts
If the BV goes bankrupt, the receiver investigates how the BV was managed. If that was manifestly improper and is an important cause of the bankruptcy, you are liable for the deficit. That can involve large amounts.
The sting is in two formal duties. If in the three years before bankruptcy you did not keep proper records, or did not file the annual accounts with the Chamber of Commerce on time, improper management is established and the law presumes it was an important cause. You then have to prove the bankruptcy had a different cause, which rarely succeeds. The annual accounts must be filed no later than twelve months after the end of the financial year; see mandatory annual accounts.
Tax debts: the duty to report inability to pay
If your BV cannot pay the payroll taxes or the VAT, you must report this in writing to the tax authorities within two weeks of the payment deadline. If you do, you are only liable if the tax authorities can show the payment problems were caused by manifestly improper management. If you do not report it, or report it late, the burden of proof shifts and you are almost automatically personally liable for that debt.
The report is not an admission of debt and not a bankruptcy filing. It is a signal that you take the situation seriously, and often the prelude to a payment arrangement. How to request one is in being unable to pay your taxes. This reporting duty does not apply to corporate income tax.
Example: VAT for the third quarter
- Payment deadline
- 31 October
- Reporting deadline
- 14 November
- Reported on 10 November
- tax authorities must prove improper management
- Not reported
- you must prove you are not to blame
Result: Two weeks is short. If you see that the BV will not be able to pay, report it right after the payment date.
Paying a dividend: the distribution test
Before the BV pays a dividend, you as a director must test whether the BV can keep paying its due debts afterwards. Usually a period of about a year ahead is considered. If you approve while you knew or should have known the BV cannot, you are liable for the resulting shortfall. That also applies if you route the dividend through a holding company.
Record the test in writing with a cash flow forecast and keep it with the resolution. That way you can show later that you acted carefully.
How to limit your risk
You mainly prevent director's liability by having the basics in order. These points cover most of the risks:
- Keep your records up to date and retain everything for seven years.
- File the annual accounts well within twelve months after the financial year.
- Report inability to pay payroll taxes and VAT within two weeks.
- Only pay a dividend after a written distribution test.
- Do not enter into large obligations if you know the BV cannot meet them.
Frequently asked questions
Am I never personally liable with a BV?
In principle not, but you are if you seriously neglect your duties as a director. Think of sloppy records, annual accounts filed late or an unreported tax debt.
Within what period must I report inability to pay?
Within two weeks of the day on which the tax should have been paid. The report applies to payroll taxes and VAT, not to corporate income tax.
What happens if I file the annual accounts late?
If the BV goes bankrupt within three years, improper management is established and the law presumes it was an important cause. You then have to prove yourself that the bankruptcy had a different cause.
Can I be liable for a dividend distribution?
Yes, if you knew or should have known that the BV could no longer pay its debts after the distribution. So always record a distribution test.
Sources
- Reporting inability to pay taxes and contributionsBelastingdienst · belastingdienst.nl
- Limit your liability as a directorKVK · kvk.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
