When BV Cash Builds on Private Land, Tax Follows the Benefit

A company invoice cannot turn a shareholder’s private improvement into a business asset.

The invoice looks ordinary. Timber, steel, concrete and contractor hours appear on the page. The BV has enough cash, and the building may provide storage. The supplier has placed the company name on the bill. Payment leaves the business account. The bookkeeper records construction expenditure.

Yet the new shed stands beside the director’s home, on land owned privately by the director and major shareholder, the DGA. One question soon reaches beyond the ledger: what, exactly, did the BV receive for its money?

That question was central to a case before the Amsterdam Court of Appeal. In ECLI:NL:GHAMS:2026:2577, the court considered construction costs charged to a BV for a shed or warehouse built on its shareholder’s private plot. The disputed correction was €58,454. The court treated the payment as a profit distribution and therefore as income from a substantial interest in 2015.

The judgment does not mean that a BV can never use a building on private land. It shows how quickly a convenient arrangement can lose its business character when ownership, use and explanation point in different directions.

The physical facts matter

During a 2019 business visit, the shareholder said the shed was used privately and for BV activities. Later, he argued that it had been built exclusively for temporary company use. The court preferred the earlier explanation and found that the BV had paid costs the shareholder should have borne himself.

That detail matters. Tax disputes are rarely decided by the ledger description alone. The structure’s location, ownership of the land, control of access and actual use can carry more weight than the account chosen by the bookkeeper.

A founder may have a genuine commercial reason to place tools, stock or machinery near home. Contractors, installers, online retailers and agricultural businesses often work across the boundary between domestic and commercial space. Dutch business life is full of practical arrangements. Practical does not automatically mean wrong.

But every arrangement still needs a clear corporate answer. Did the BV obtain ownership, a contractual right of use or another measurable benefit? Was that benefit proportionate to the amount paid? Could an unrelated company have accepted the same arrangement?

The case also shows the weakness of relying on intention after the event. A plan to use a building for a future project may be sincere. It becomes persuasive when the agreements, drawings, management decision, asset register and daily use already support that plan.

One payment, several tax pressures

A private cost inside the BV can affect more than one tax return. If the expenditure does not serve the company’s business interests, it may not properly reduce corporate taxable profit. If company value moves to the shareholder without a business basis, the benefit can enter box 2 as income from a substantial interest.

For 2026, the Belastingdienst states that box 2 income is taxed at 24.5 percent up to €68,843 and 31 percent above that amount. Those rates do not change the 2015 assessment in this case. They show the current cash consequence for an owner who allows a private benefit to pass through the company without recognising it early.

VAT requires a separate reading. VAT on business expenditure may be deductible when the conditions are met. Private use can restrict that deduction or require a correction. The VAT answer does not determine whether a profit distribution exists. Both questions do, however, examine the gap between the booking and the real use.

That is how a construction payment can become expensive twice. The BV has already spent the cash. A later correction can increase company profit, create personal box 2 exposure and reopen the VAT treatment. The money needed for that second round may no longer be available.

The governance problem is just as important. In a small BV, one person may be director, shareholder, private landowner and user of the building. Familiarity makes those roles feel interchangeable. Legally and fiscally, they are not.

Records should follow the decision

A short decision made before construction can carry more value than a long explanation written years later. It can record why the BV needs the structure, what rights it receives, how the budget was approved and how private use will be separated. Contracts, permits, invoices, bank payments, photographs and the asset register should then tell the same story.

Belastingdienst guidance requires an administration from which tax returns can be prepared and checked. Basic records generally remain subject to a seven-year retention period. Records concerning immovable property generally remain relevant for ten years. For a structure on private land, this is not clerical housekeeping. The records preserve the commercial logic after memories and plans have changed.

For an existing project, a useful review begins with reality rather than the original account code. Who owns the land and structure? What can the BV legally use? What is stored or performed there? Who benefits when the company stops using it?

Those answers may support the original treatment, call for an allocation between business and private use, or indicate that another treatment should be considered with an adviser. The precise result depends on the ownership, agreements, use and surrounding facts.

Return to the invoice on the bookkeeper’s screen. It is genuine, paid and correctly added. None of that settles who received the benefit. That is the deeper lesson from the Amsterdam case.

Company cash carries company responsibility, even when the director owns both sides of the arrangement. The useful question is not whether the shed can somehow be connected to the business. It is whether the BV’s payment, rights, use and records describe one honest transaction, and what tax, cash and governance result the present arrangement will produce.

The data, sourcing, and analysis behind this article were conducted by Linda Pavan Geraedts. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan Geraedts before publication.

References

• Bouwkosten privéschuur vormen winstuitdeling aan dga - Taxence
• Rechtspraak - Court ruling: BV-funded construction on private land
• Wettenbank - Box 2 treatment of regular benefits and profit distributions
• Belastingdienst - Current box 2 exposure for a DGA
• Belastingdienst - Business purpose, mixed use and corporate-tax profit
• Belastingdienst - VAT and private use of company-paid goods or services
• Belastingdienst - Evidence, records and the durability of a business explanation
• Belastingdienst - Dividend withholding and cash timing