As an entrepreneur, you often use a company to conduct your activities. When things are going well, there is usually little time and attention for the legal and fiscal implications (and opportunities) of what is happening with the figures and the accounting of the company.
Here are some tips and points of attention regarding the frequently occurring "current account" (in Belgian companies) that accountants often have to quickly make appear in the accounting and which usually tends to increase rapidly.
1: Borrow
You can borrow as a shareholder or director of your company. Unlike other countries, this can be done in Belgium without many restrictions. This can be interesting if you want to make a private investment or need cash in the short term. When you simply transfer those funds to your private account, this transaction is recorded on your so-called "current account" (active C/C). This is fine, although the interest rate that the tax authorities apply to it (and which is usually added annually to that current account) is quite high (for the tax year 2024, this reference interest rate was 5.43%). A simple alternative is to formally make this private booking a loan agreement (and put it on paper) whose terms will often be much more advantageous, also in terms of interest rate (currently 3.14% is considered sufficient). This agreement must of course meet certain criteria.
2: Make private funds available
A current account can also work in the opposite direction: you can make private funds available to your company (passive C/C). Here, it is always recommended to draw up a loan agreement to also process this correctly in accounting (and plan financially). The interest you agree on can also make a nice (and lightly taxed) extra income for you privately. For information: for 2024, the market-conform interest rate you can charge (and which is also deductible within the company) is as much as 8.02%. Be mindful of the conflict of interest regulation within your company because you have an interest in a higher interest rate while your company will in principle seek the opposite: so make sure you are not on both sides of the signing.
3: An asset of your estate
However, a current account receivable also forms an asset of your estate and this is often forgotten. If nothing has been arranged in advance, this receivable must be included in your inheritance tax return and inheritance tax must be paid on it even if your heirs do not (yet) receive anything at that time. Conversely, the current account debt can also be part of what the company must recover from the heirs.
4: Bank financing
Current account relationships also invariably come up when your company wants to obtain bank financing (Why don't you first repay your C/C yourself, then the company will also have money?).
5: Financial difficulties
This is also a point of attention in case of financial difficulties: if your company goes bankrupt, the liquidator will invariably come to collect this current account from you. As a receivable, the current account is also subject to seizure by creditors.
6: An evolving matter
The current account relationship between you and your company is also often an evolving matter and since there are always two sides (receivable and debt; active and passive), a debt can be offset by a new receivable, and so on. For example, your current account debt can be reduced by a salary you grant yourself but do not pay out. Or through the sale to the company of a personal asset (goodwill, brand, shares) without the company actually paying the price. Numerous possibilities, therefore, to keep that current account relationship in balance and to tilt it in the right direction at the desired moment.
All this naturally requires an excellent knowledge of a range of legal and fiscal rules as well as accounting law: there are indeed also certain limits and restrictions on, for example, the interest payments that the company can deduct fiscally as a cost; or in determining the correct interest rate to avoid negative fiscal implications for the company manager.
Assistance from a firm like ours, which also works in a multidisciplinary manner via VB-Alliance (www.vb-alliance.com), is therefore highly recommended.
