The distribution test before a dividend: court fees, official charges and what drives the cost
You are here because a management board is about to approve a dividend and needs to know what the distribution test actually costs to run. This page sets out the sequence of steps, who acts at each one, and the charges that attach to the process under Dutch law. It does not price legal advice, and it does not tell you whether your board should approve or refuse.
What the distribution test is and when it applies
The distribution test is the check a management board of a Dutch entity runs before it approves paying out reserves as a dividend. It sits alongside the balance sheet test, which asks whether the distribution is covered by freely distributable equity. The distribution test asks a different question: whether the company can keep paying its debts as they fall due after the money leaves. Both tests are steps the board takes, not filings made with a court.
Three situations bring boards to this page. A holding company inside a larger group wants to upstream cash to a parent and needs the test run correctly before the resolution is signed. A private equity portfolio company is under pressure from an investor to distribute ahead of a refinancing. A family business is preparing a dividend after a strong year and wants the paperwork to survive scrutiny if a creditor later challenges it.
The route, step by step
The distribution test runs inside the company. No court and no register is involved unless the distribution is later disputed. The table below sets out who does what.
| Step | Action | Who acts |
|---|---|---|
| 1 | Prepare the interim or year-end balance sheet used as the reference point | Finance function, under management board oversight |
| 2 | Apply the balance sheet test to confirm freely distributable equity covers the proposed distribution | Management board |
| 3 | Apply the distribution test: assess whether the company can continue paying its debts as they fall due after the distribution | Management board |
| 4 | Document the assessment, including the assumptions used for the liquidity forecast | Management board, with company secretary support |
| 5 | Put the proposed dividend to the general meeting for resolution | Shareholders |
| 6 | Approve or refuse the distribution in writing, recording the reasons if refused | Management board |
| 7 | Execute payment once approval stands | Company, through its finance function |
| 8 | If the distribution is challenged after payment, respond to a claim from a creditor, a liquidator or a director liability action | Management board, with Dutch-qualified counsel of record where litigation follows |
Step 6 is the one boards get wrong most often: approval by the general meeting does not override a management board that has refused, or should have refused, on liquidity grounds.
What the timeline actually looks like
The internal steps move quickly once the balance sheet and liquidity forecast exist. A dispute, if one follows, moves on a different clock entirely.
| Stage | Typical duration |
|---|---|
| Preparing or updating the reference balance sheet | Days, if management accounts are current |
| Running the balance sheet test and the distribution test together | Same week as the balance sheet is finalised |
| Drafting and signing the board resolution | Days |
| Shareholders' resolution, where a meeting or written consent is required | Within the same cycle, subject to the company's own notice requirements |
| A challenge to the distribution, once raised | Under the applicable Dutch rules; this is not a fixed internal deadline |
Where a group structure spans more than one entity, add time for each additional board that must run its own version of the test.
What we would need to see before advising
Before a scoping conversation is useful, we need the following, at minimum:
- The most recent balance sheet or management accounts used as the reference point
- The proposed dividend amount and the entities in the payment chain
- Any existing liquidity forecast, covenant terms or lender consent requirements
- The group structure, if the distributing entity sits inside a holding chain
- Whether a distribution of this kind has been challenged, refused or queried before
Without these, any comment on your position would be speculation, not advice.
What drives the cost
There is no service price on this page. What follows are the factors that move the cost of running the process and getting it right, not a rate or a total.
| Cost driver | Effect |
|---|---|
| Number of entities in the group structure | Each additional entity needs its own balance sheet test and distribution test |
| Whether an external solvency or liquidity opinion is commissioned | Adds a distinct workstream and its own charges, set by the provider, not by us |
| Whether the balance sheet requires restatement or audit sign-off before the test can run | Extends the timeline and the review required |
| Whether documents need translation for a foreign parent, lender or auditor | Translation is charged as a pass-through, not folded into advice |
| Whether lender consent or a covenant waiver is required | Adds a negotiation step outside the distribution test itself |
| Whether the distribution is challenged after payment | Moves the matter from governance advice to a dispute, with its own court fees under the applicable Dutch rules |
Official charges, where they apply — for example a Kamer van Koophandel filing connected to updated figures, or a court fee if a challenge is filed — are passed through at the rate the relevant register or court sets. We do not mark them up and we do not quote a total in advance of knowing which of them apply to your structure.
The decisions that stay with you
The management board decides whether to approve or refuse a distribution; that decision cannot be delegated to an adviser. Shareholders decide whether to propose a dividend for resolution. The board alone decides what assumptions go into the liquidity forecast, and it carries the consequence of that judgement under Dutch company law and governance rules. Advice can test the reasoning; it cannot substitute for the board's own assessment.
What can go wrong and what we do about it
The most common failure is a board approving a distribution on the strength of the balance sheet test alone, without running the distribution test as a separate and later question. The second is treating a group parent's instruction as sufficient authority, when the subsidiary's own board carries its own duty. The third is documenting the assessment too thinly to survive a later challenge from a creditor or a liquidator.
Where the structure spans more than one jurisdiction, a further risk appears: a parent entity outside the Netherlands may apply a different solvency standard, and the two tests are not interchangeable. A structure report on the German ownership chain is one way to confirm the chain before the Dutch board relies on it.
Questions
Does the distribution test require a court filing?
No. The test is an internal governance step taken by the management board before a dividend is paid. No court, register or notary is involved at this stage. A court becomes relevant only if the distribution is later challenged by a creditor, a liquidator or in a director liability claim, at which point separate court fees apply under the applicable Dutch rules.
What happens if the management board refuses a distribution?
The board records its reasons and the distribution does not proceed, regardless of a shareholder resolution approving it. A shareholders' resolution to declare a dividend does not override a board refusal made on liquidity grounds under Dutch company law. Directors who approve a distribution they should have refused can face personal liability if the company cannot meet its debts afterwards.
Can shareholders overrule a board refusal?
No, not directly. Shareholders can replace the board or pursue other governance remedies, but they cannot substitute their own judgement for the board's refusal on the distribution test itself. Any attempt to force payment against a documented refusal moves the matter toward a dispute, with its own procedure and its own fees.
Does a foreign parent company need separate legal advice?
Usually yes, where the payment flows to or through a jurisdiction with its own solvency or capital maintenance rules. The Dutch distribution test governs the Dutch entity's board; it does not settle the position of a parent or lender in another jurisdiction. Cross-border structures typically need the Dutch test confirmed alongside the equivalent check where the receiving entity sits.
What if the distribution test is challenged after payment?
A challenge is handled as a dispute, not as a continuation of the governance step. It may come from a creditor, a liquidator in a subsequent insolvency, or as a director liability claim against board members personally. At that stage the matter is conducted with Dutch-qualified counsel of record, and court fees apply separately from anything described on this page.
What this does not cover
- The rate or total cost of legal advice on a distribution — no service price appears on this site
- Tax treatment of the dividend itself, including withholding tax and any treaty relief
- The solvency or capital maintenance rules of a jurisdiction outside the Netherlands
- Drafting or negotiating lender consents and covenant waivers as a standalone matter
- A conclusion on whether your specific board should approve or refuse a specific distribution
Next step
A 30-minute scoping call is the right first step if a distribution is on the table and the board has not yet documented its assessment. Bring the current balance sheet, the proposed amount and the group structure; you will leave the call knowing what the distribution test requires for your specific structure and what, if anything, needs external input. Where the group includes non-Dutch entities, a structure report settles the ownership chain and reporting lines before the board relies on them. Related reading: works council consultation costs and fees, the cross-border effect of vendor due diligence, and director defence if a refusal or approval is later challenged.
Last legal review: 2026-09-23