Running a business in the Netherlands implies complying with various requirements. Some of these are legal, while others are related to the accounting sphere of the company.
One of the most important aspects to consider when keeping the accounting of a Dutch company is preparing and filing the annual financial statements. These are the most important documents that reflect the activities of the company.
Below, our Dutch accountants explain the main regulations that apply when having to draft and file the annual financial statements. You can rely on us for assistance in such matters.
What is a financial statement?
A financial statement is a formal document where all financial activities of a business are described in an easy-to-understand manner. Every corporate entity in the Netherlands is legally compelled to fill in financial statements. Foreign companies that file their financial statements in their home country must also register a copy to the Dutch Trade Register of the Chamber of Commerce. Branches are not required to prepare their own financial statements. Our Amsterdam accountant can tell more about the accounting requirements for different types of businesses.
The roles of financial statements
The financial statements have two purposes: reporting to the shareholders and creditor protection. After receiving the financial statements, the shareholders may decide whether to continue the collaboration with the board of directors or to discharge them, all based on their performance in the previous year. As for the second role, every company must be registered with the Trade Register, which is maintained by the government and where all companies and their key details are listed. Companies must publish financial information on an annual basis.
What are the companies required to file annual financial statements?
Not all legal entities are required to file annual financial statements in the Netherlands. One of the best examples in this sense is the sole proprietorship which is exempt from such accounting requirements. Micro enterprises and small companies can also benefit from exemptions under certain circumstances.
On the other hand, the following legal entities must prepare and file such papers:
- private and public limited liability companies (BVs and NVs);
- cooperative associations also fall under these regulations;
- mutual insurance companies and associations which are subject to specific requirements;
- general or limited partnerships with foreign managers (all managers must be foreign for this rule to apply);
- associations and foundations with annual turnovers of at least 6 million euros in the past 2 years.
Our accountants in the Netherlands can explain the requirements applicable when it comes to filing annual tax returns and financial statements.
Preparation of annual financial statements for Dutch companies
The drafting of the annual financial statements implies several steps. The papers are prepared by the management board who must also create a management report. Most companies must have these documents prepared 5 months after the end of the financial year, however, in the case of cooperatives the timeframe is 6 months.
After preparing the financial statements, the board will present them to the shareholders and will have them released for audit. After the audit, the financial documents can be filed with the Dutch tax authorities, but also with the Companies Register.
For most companies, the filing of annual financial statements can be completed online in a digital format, however, it depends on the size of the company.
It should also be noted that companies can request the services of our accounting firm in the Netherlands that will file the annual financial statements in respect to the Standard Business Reporting (SBR) requirements. This is a mandatory condition when appointing a proxy to submit these documents.
Accounting obligations for foreign companies in the Netherlands
The Netherlands is home to a significant number of foreign companies that operate here through branches and subsidiaries which must comply with the accounting requirements imposed here.
Annual financial statements must be prepared by the following:
- – foreign companies registered outside the EU and operating through branch offices in the Netherlands;
- – foreign companies registered formally in other countries but with the main operations in the Netherlands.
Subsidiary companies treated as domestic businesses are subject to the same requirements as local ones, however, there are also a few exceptions that can be explained by one of our accountants in the Netherlands.
What are the main accounting documents to be prepared by a Dutch company?
When preparing and filing annual accounts, a company must consider that there are several documents that need to be drafted in order to reflect a correct situation of the business.
The following documents must be comprised in the file submitted with the tax office and the Commercial Register:
- – the report drafted by the management board;
- – the financial statements;
- – the consolidated financial statements (where applicable).
A Dutch company’s financial statements will comprise:
- – the balance sheet;
- – the profit and loss account;
- – accounting notes.
In the case of medium and large-sized enterprises a cashflow statement must also be filed.
The Commercial Trade Register
In the Netherlands, the Trade Register is regulated by the Commercial Registers Act of 8 February 1996, followed by a new Commercial Registers Act that came into effect on 1 July 2008. The institution responsible for the administration of the Commercial Register is the Chambers of Commerce. The register is open for public access and information can be requested from the commercial register for a fee.
In the Netherlands, the financial statement filled for the Trade Register must contain the registered office, ownership details, details regarding authority, and the annual accounts. The Dutch law imposes that all private limited liability companies (BVs), public limited liability companies limited by shares (NVs), cooperatives and all mutual benefit companies to file a financial report with the Chamber of Commerce each financial year.
The procedure for filling financial statements
The management must prepare the annual financial statements within five months from the end of the financial year and submit them to the shareholders for adoption. As an exception, the shareholders may grant a postponement which cannot be extended for more than six months. The shareholders must adopt the financial statements within two months from their registration. The adopted annual financial statements must be filed with the Chamber of Commerce within eight days of adoption.
What happens if the filling of financial statements is delayed?
If the financial statements are delayed but the shareholders will approve them shortly, then the management must register them with the Chamber of Commerce no later than seven months (or thirteen months, if the maximum extension applies) after the balance sheet date.
If the company delays filling in the financial statements more than thirteen months, it may receive penalties for the economic offence. The Economic Investigation Service in the Netherlands might conduct an investigation that might result in a criminal conviction from the Courts, and eventually in a fine. If the company goes bankrupt and fails to file the financial statements or these are filed late then the management of the company will probably be held liable for all the bankrupt company’s remaining debts.
We invite you to watch a video about the annual financial statements in the Netherlands:
Accounting principles when filing financial statements in the Netherlands
The filing of financial statements must be completed in accordance with specific accounting principles. In the Netherlands, the Generally Accepted Accounting Standards (GAAP) and the International Financial Reporting Standards (IFRS) are the principles applying to companies that are required to file statements.
Under the GAAP, there are several accounting documents that need to be filed by a Dutch company during the financial year. These must be filed in accordance with specific regulations which apply differently based on the type of company. The following financial documents must be prepared under the Dutch GAAP:
- – the balance sheet;
- – the income statement and the cash flow statement;
- – the comprehensive income statement;
- – the explanatory notes in which the accounting policies of the company are presented.
It should be noted that the GAAP is a local accounting regulation applying to Dutch companies, however, these can also file their financial papers under the International Financial Reporting Standards which implies slightly different requirements.
Dutch companies following the IFRS principles will file similar documents just like under the GAAP, with the mention that a statement on the financial position of the company, a profit and loss account, a declaration on the changes in equity, a cash flow statement. and the notes regarding the accounting principles used by the accounting firm preparing them are also required.
If you need guidance in understanding the principles that suit your company best you can rely on our accounting firm in the Netherlands.
The company’s annual report
One of the important financial documents that need to be filed by a Dutch company is the annual report which must comprise the directors’ report, the financial statements and the auditor’s report. When it comes to the audit of a Dutch company, the requirements can differ based on the size of the business.
The financial statements must comprise the profit and loss account, the balance sheet, the notes attached to the account, which is required only for medium and large-sized enterprises, and the cash-flow statement. In certain cases, the Articles of Association must also provide for the appropriation of business profits and the details must be extracted by the auditor from the statutory documents.
The director’s report is one of the most important financial documents that needs to be prepared by a Dutch company on a yearly basis. Even if this report is not part of the mandatory financial statements, it must be consistent with them. A particularity of this report is that it can be drafted in any language, which is a benefit for foreign companies.
The directors’ report must offer the following information:
- – a true evaluation of the financial position of the business at the time the balance sheet is created;
- – a description of the risks undertaken by the company;
- – information on the development of the business in the near future.
The evaluation of the directors must provide for financial and non-financial performance indicators, the results, and the development of the business operations.
In the case of groups of companies, such as holding companies, the directors’ report must contain information on the entire group.
Our Dutch accountants are at your service with more information on the preparation and filing of financial statements.
Maintenance of accounting books in the Netherlands
The Dutch Civil Code provides several requirements when it comes to demonstrating a company’s financial situation which is reflected in the maintenance of accounting records for specific timeframes. Generally, these must be kept at the legal seat of the Dutch company for a minimum period of 7 years, however, different requirements may apply under certain circumstances.
In the case of foreign companies, these must provide the accounting records upon request.
Another important aspect to consider when filing accounting documents in the Netherlands is that these cannot be submitted with the Trade Register without first being approved by the shareholders.
While there are no requirements for the records to be maintained in euros, the tax return must be filed in this currency. Companies operating in multiple currencies are allowed to keep dual ledgers (with some exceptions) that must contain the same information. Also, the financial statements can be filed in another currency than euro in the case of company groups, as long as this choice is justified.
Our accountants in the Netherlands can provide more information on exceptions for financial statement filings.
What to consider when filing annual financial statements
Dutch companies must prepare and file their annual financial statements within the timeframe required by the law. The next aspects need to be considered:
- – the financial year in the Netherlands is 12 months and usually corresponds to the calendar one;
- – the annual financial statements must be submitted within 8 days after their adoption;
- – the period cannot exceed 12 months after the financial year in case of postponement.
Cost of filling financial statements
The costs of registration are included in an annual contribution and depend on the legal form of the entity and the number of employees. For further details and customized information contact our team of accountants in Netherlands. We offer qualified consultancy and advice related to legal matters concerning registration and filling in financial statements. We also offer other services, among which employment-related ones. Payroll and HR administration is evolving because of the legal requirements and frequent changes in the law. It is a sure thing to outsource payroll in the Netherlands to local professionals. This way, the administrative burden is lessened, time and resources are saved, but most significantly, there are no longer any chances of non-compliance.