InsightsNovember 18, 2020
Allowing employees to share in the profits via STAK
When your business grows, it can be interesting to bind employees to the organisation. A logical way to do this is by letting them share in the profits. There are several options for this. In this article, we will discuss doing so using STAK.
As the DGA (director and major shareholder) of your business, you will prefer to be in control. Nevertheless, it can be attractive to retain your staff by not only offering them a good salary, but also a part of your profit. This can be done by offering them shares in the company. Profit distributions (dividends) are an exclusive right of the shareholders of a corporation.
The general meeting of shareholders
Each year, the general meeting of shareholders (GMS) approves the annual accounts and determines the distribution of profit. The GMS consist of everyone who owns shares in the company (regardless of whether they own 1% of 100% of the shares) and has ultimate control. The board of directors of the company is accountable to the shareholders.
In the case of a BV with one or two shareholders this is all quite simple. But if you’re issuing shares to your staff, this can create a complex situation in which too many people gain control, making it difficult to make decisions. Shareholders also have insight into all kinds of data you might not want to share with your staff directly, such as the salary of the DGA, the costs and certain choices that are made.
Setting up a STAK
The easiest way to prevent this – while still letting your staff share in the profit – is by setting up a STAK, a trust office foundation (Stichting Administratiekantoor in Dutch). The only task of this foundation is to distribute the profit without having to share voting rights.
This works as follows: the shares of the company are managed by the foundation. As the DGA of your BV, you become the 'transferring shareholder' in the board of the STAK, and are therefore the only person with voting rights in the foundation.
The foundation itself doesn’t issue shares, but certificates, which are managed in a certificate register. When the BV is doing well, it pays out a dividend to the STAK which pays out the certificate holders.
Income tax return for shareholders
For employees with less than 5% worth of certificates, the profit distribution falls in box 3 of the income tax return. This means that dividend tax is withheld before the dividend is paid and that this dividend tax is deductible from the income tax that has to be paid. For employees with more than 5% worth of certificates, the benefits fall in box 2 (substantial interest).
As you can see, STAK gives you an option to grant certificates to valuable employees by letting them share in the annual profit, without giving them control over the organisation. Unlike shares, you don’t have to record the issuing of the certificates at a notary, which saves administrative hassle. Please note that you do need a notary to set up a STAK.