Compensation in Divorce of a DGA in Leiden
A divorce where one or both partners are director-major shareholders (DGA) involves specific legal and financial challenges. In particular, the division of pension rights and the value of business assets requires careful consideration, especially in the Leiden region. The DGA pension and shares in a BV are often closely linked to the marital property. This guide provides insight into the compensation scheme in a DGA divorce, based on the Act on Equalization of Pension Rights upon Divorce (Wet VPS) and relevant provisions from the Civil Code (BW).
What Makes a DGA Divorce So Complicated?
A DGA is both director and owner of a substantial interest (at least 5%) in a private limited company (BV). In a divorce, three important asset components play a role:
- 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 unique fiscal and legal treatment of these elements, which differs from standard pensions or employment income. In Leiden, you can seek legal support at the Juridisch Loket Leiden at Stationsweg 46.
Legal Basis: Wet VPS and BW
Act on Equalization of Pension Rights upon Divorce (Wet VPS)
The Wet VPS regulates the division of pension rights accrued during the marriage. For DGAs, Article 2 of this act is relevant, whereby the old-age pension accrued during the marriage is in principle divided fifty-fifty, unless otherwise agreed.
Civil Code (BW)
According to Article 1:141 BW, the marital community is divided. In the case of matrimonial property arrangements with a settlement clause, the value increase of the business assets during the marriage must be included in the settlement.
Fiscal Regulations
The Income Tax Act 2001 and the Corporate Income Tax Act 1969 determine the fiscal impact of distributions from the BV, which may affect both ex-partners after the divorce.
Options for Compensation in Divorce
1. Division of Pension Rights (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 rights accrued during the marriage. This can be done in two ways:
- Regular Equalization: Upon retirement, the ex-partner receives his/her share of the benefit
- Conversion: The rights are converted into an independent pension provision with an external insurer
2. Lump-Sum Buy-Out as Compensation
Instead of a long-term division, the DGA may choose to pay a lump-sum amount as compensation for the pension rights. However, this involves fiscal consequences that must be carefully weighed.
3. Settlement of Business Assets
If the value of the BV has increased during the marriage, this value increase can be divided, depending on the matrimonial property arrangements. In the case of community of property, this increase falls by default into the assets to be divided.
Practical Steps for Compensation Calculation
Step 1: Valuation of the DGA Pension
An actuary must determine the value of the DGA pension, taking into account factors such as the accrued old-age provision, fiscal reserves, life expectancy, and expected returns.
Step 2: Establishing the Marriage Period
Only the pension accrued during the marriage qualifies for equalization. This is calculated using the formula: marriage years / total accrual years.
Step 3: Determining the 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, including pros and cons, you can contact specialists via the District Court of The Hague, Leiden location, or the Juridisch Loket Leiden.
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