In the event of a divorce, am I entitled to compensation for my (ex-)partner's business?
If you got married after 1 January 2018 without drawing up a prenuptial agreement, based on Dutch law you are married in a limited community of property. In broad terms this means that everything that was not acquired together before the marriage remains private even after the marriage. For more information on the limited community of property, I kindly refer you to an earlier blog on our website.
Premarital business
If your (ex-)partner has founded an enterprise prior to the marriage, this enterprise is not included in your limited community of property. This means that this company remains the private property of your (ex-)partner, as a result of which you will, in principle, not be entitled to the value of this company or the income from it.
Because during the marriage the (ex-)partner uses knowledge, skills and labour for the benefit of this enterprise, in certain cases it may be unreasonable if the enterprise in question does not play a financial role in the divorce. The Dutch legislator has corrected this imbalance by creating Article 1:95a of the Dutch Civil Code.
The reasonable compensation pursuant to Article 1:95a of the Dutch Civil Code (DCC)
Article 1:95a of the DCC stipulates that the community is entitled to a reasonable compensation for the knowledge, skills and labor that your (ex-)partner has performed for the benefit of the company. The reasonable compensation is only paid if during the marriage the other spouse has not been financially compensated for this.
The legislator has deliberately used an open standard in the relevant article because every situation is different. How the reasonable compensation should be calculated is still unknown and will become clear in the future from case law. Until the beginning of 2022, there was no case law that made it clear how such compensation should be calculated.
As stated, the legislator has not given any indication how the compensation should be calculated, but only stated that this compensation must be ‘reasonable’. In the literature, various possibilities have been mentioned to calculate this reasonable compensation, but of course it must be examined per case how this will work out.
Transitional law
The aforementioned article is not included in the so-called transitional law. This means that the reasonable compensation for premarital affairs also applies to marriages entered into before 1 January 2018. This will soon change, because a bill has been proposed to the Dutch Senate in which the article is included in the transitional law and therefore only applies to marriages that have not entered into a prenuptial agreement and have been entered into after 1 January 2018.
Marital Conditions
Are you married without drawing up a prenuptial agreement, is Dutch law applicable and does one of you run a business? Then it is wise to have a prenuptial agreement drawn up by a notary. This applies even more if you got married after 1 January 2018 because there is a lot of uncertainty about the content of the reasonable compensation.
Conclusion
A dispute can arise between you and your (ex-)partner about the amount of the reasonable compensation for enterprises. It is wise to make agreements on the interpretation of this compensation. We will be happy to advise and assist you in making such agreements.
Would you like more information regarding the compensation that is discussed in this blog or advice about drawing up a prenuptial agreement? Please contact our office to discuss if we are able to assist you.