The director-major shareholder and employee insurance schemes

When are you a DGA?

As a director-major shareholder (directeur-grootaandeelhouder, DGA), you are the director of a company with a legal personality. This may be stated in the deed of incorporation (akte van oprichting). Or you were appointed in the general meeting of shareholders, or by the board of supervisors. You own you own at least 5% of your company's shares with voting rights.

The legal personality can be a bv (private limited company) or an nv (public limited company), or a foreign legal personality, such as a GmbH or a Ltd established in the Netherlands.

You are not a DGA or director if you own a sole proprietorship or are a partner in a vof (general partnership).

Compulsory insurance for employees

Do you want to know whether compulsory insurance applies to you? Then consider the main rule: employees are covered by compulsory employee insurance. A director is considered to be employed by a legal personality if there is work, salary, and a relationship where the legal personality has authority. The legal personality then pays contributions for the following employee insurance schemes:

• Sickness Benefits Act (Ziektewet, ZW)
• Unemployment Insurance Act (Werkloosheidswet, WW),
• Work and Income (Capacity for Work) Act (Wet werk en inkomen naar arbeidsvermogen, WIA).

Together, these insure the DGA against unemployment, illness, and incapacity for work.

Do you work for the operating company through a personal holding company with a contract of assignment (management agreement)? Then you may also be employed and subject to compulsory employee insurance.

Director not compulsorily insured

Since 2016, there are new rules on the director's insurance obligation. The general  rule is, that if the legal personality does not have authority over the DGA, the DGA is not insured for employee insurance. See the following situations. The DGA is not insured for employee insurance if:

• it is stated in the company's articles of association that the DGA can decide on their own dismissal or that they cannot be dismissed against their will.
• the DGA hold shares representing at least two-thirds of the votes.
• if the DGA’s blood relatives or partner by marriage own at least two-thirds of the shares with voting rights and the DGA owns at least one share.
• the DGA is one of several directors and each director owns an equal share of the capital. Together, they own all the shares in the bv.

• the DGA owns the shares in the legal personality through a bv or foundation. As a director, they have control over their dismissal.

Assessment by UWV

Can you not work it out yourself? Then ask UWV to provide clarity about your insurance obligation for employee insurance. Ask for an Beschikking inzake verzekeringsplicht (Order on insurance obligation). You can do this by calling 088 898 92 94. The UWV will assess your situation and issue a decision.

The legal personality can also apply for an Order on your insurance obligation. This must be done at the Tax Administration of the region where the company is located. The UWV and the Tax Administration use the same assessment criteria to determine if a person is compulsorily insured for employee insurance.

Assessment criteria

When making the assessment, the UWV or the Tax Administration pay attention to several elements:

• The control you have over your dismissal. For example, do you have a minority stake and no say over your dismissal? Then you may be covered by compulsory insurance. Do you not want this? Then consult with your civil-law notary. A legal personality may issue shares with special rights, for example, letter shares. Record that only the holder of those shares can decide on your dismissal.
• The content of your management agreement, service agreement, or advisory agreement. These are engagement agreements. Preferably, they do not contain elements of an employment agreement. Consider the relationship of authority. Get help from a legal adviser if you want to draw up an assignment agreement.

Arrange your own insurance

Do you not fall under the compulsory employee insurance schemes? Then you decide for yourself whether to take out disability insurance. You can also join a donation circle. A donation circle is a group of self-employed people who support each other financially with donations in case of illness. The maximum period for donations is 2 years. UWV offers voluntary disability insurance for a starting director.

You can deduct the premium for disability insurance in your income tax return. Insurance against illness is not necessary. The legal personality continues to pay the salary or management fee if you are ill. Taking out unemployment insurance is not possible.