On May 27, 2020, an initial ruling was issued by the Hague Court of Appeal regarding the impact of the Corona crisis on an alimony obligation. It had been argued by the alimony obligor that due to the Corona crisis the turnover of his B.V. had completely disappeared. This led to acute financial problems. The husband had argued that he could no longer pay himself a dividend and that he should have reduced his salary as a dga. The court found it plausible that the man could no longer pay dividends as a result of the Corona crisis. Therefore, a dividend payment was not taken into account in the calculation of the carrying capacity. However, the court did not go along with the man’s position that he was forced to reduce his salary as a DMS. The court ruled that the man should have substantiated the financial necessity with operational cash flows. After all, from these cash flows the income and expenses directly related to the operation of the B.V. can be derived. And thus: whether or not the B.V. is still able to meet the salary. Since the husband had not substantiated this, the well-known starting point was followed for calculating the support capacity of entrepreneurs. That starting point is: the average salary paid over the last three years.
Conclusion: in order to be able to prove that you, as an obligated business owner, can no longer meet your alimony obligation, an insight into the operational cash flows must be provided. Indeed, it may follow that income has completely dried up and expenses continue unabated. In this case, then, the husband’s position that he should have reduced his salary would have been plausible.
More information regarding reducing an alimony obligation due to the major financial impact of the Corona crisis can be found in this news release on our website.
