Compensation in Divorce of DGA’s in Tilburg
A divorce involving a director-major shareholder (DGA) brings specific legal and financial challenges. Dividing business assets and DGA pension rights requires careful considerations, especially in relation to marital property. This guide provides an overview of compensation options in a DGA divorce, based on the Pension Equalisation upon Divorce Act (Wet VPS) and relevant provisions from the Civil Code, specifically aimed at residents of Tilburg.
What Makes a DGA Divorce So Complicated?
A DGA is a person who is both a director of a private limited company (BV) and holder of a substantial interest (at least 5% of the shares). In a divorce, the following asset components play a crucial role:
- The value of the shares in the BV
- The DGA pension, often built up within the own BV
- Other assets such as real estate or savings
The complexity lies in the different fiscal and legal treatments of these components compared to standard pensions or employment income.
Legal Basis: Wet VPS and Civil Code
Wet VPS and Pension Division
According to the Wet VPS, pension rights accrued during the marriage must be divided. For DGA’s, article 2 of this act provides that the old-age pension accrued during the marriage is split equally (50/50) by default, unless otherwise agreed.
Provisions in the Civil Code
The Civil Code, specifically article 1:141 BW, regulates the division of the marital community. In the case of matrimonial property conditions with periodic settlement, the value increase of the business assets during the marriage must be taken into account.
Fiscal Rules
The fiscal aspect is determined by the Income Tax Act 2001 and the Corporate Income Tax Act 1969. Distributions from the BV may have tax implications for both parties after the divorce.
Compensation Options for DGA’s
1. Division of Pension Rights (Wet VPS)
The DGA pension accrued during the marriage is divided in accordance with the Wet VPS. The ex-partner is entitled to half of these rights, which can be implemented in two ways:
- Standard division: The ex-partner receives his/her share of the pension payment upon the DGA’s retirement.
- Conversion: The rights are converted into an independent pension provision with an external insurer.
2. Buy-out as an Alternative
Parties may opt for a one-time buy-out of the pension rights. In this case, the DGA pays a fixed amount to the ex-partner as compensation. However, this has fiscal consequences and must be carefully aligned with the applicable tax rules.
3. Settlement of Business Assets
If the value of the BV has increased during the marriage, this value increase can be settled, depending on the matrimonial property conditions. In the case of community of property, this increase falls into the estate to be divided by default.
Practical Steps for Compensation Calculation
Step 1: Valuation of DGA Pension
An actuary must determine the value of the DGA pension, taking into account factors such as the old-age provision, fiscal reserves, life expectancy and expected returns.
Step 2: Determining Marriage Years
Only the portion of the pension accrued during the marriage qualifies for equalisation. This is calculated using the formula: marriage years divided by total accrual years.
Step 3: Determining Compensation Amount
The final compensation amount is determined based on the actuarial value of half of the rights accrued during the marriage.
Overview of Compensation Options
For a complete overview of the options and legal support in Tilburg, you can contact the Juridisch Loket Tilburg at Spoorlaan 364 or submit matters to the District Court of Zeeland-West-Brabant, located at Wilhelminapark 100.