Overview of Accounting & Auditing in the Netherlands
A company must maintain accounting records that are sufficiently adequate to determine the company's financial position at any time. Various regulations, including civil and tax regulations, stipulate the period for which the records must be retained. As a general rule, the records must be kept for a period of 7 years.
Enterslice can provide in-depth assistance on the accounting standards that apply to international and local businesses, which are completed in accordance with the EU's legislation. The accounting system in the Netherlands is based on the International Financial Reporting Standards (IFRS). The accounting procedures that a Dutch company must meet vary depending on the company's size.
Our team responds promptly and in a professional manner to all received inquiries. Our team can provide professional assistance tailored to the needs of our client's businesses. We provide personalized consultancy and give each client the time and attention they deserve for solving any problem in the best possible way.
Our team of accountants can help entrepreneurs with advice on the laws regulating the accounting standards in the country, along with preparing the necessary financial documents for a company which must file its financial statement with the local tax institutions.
Benefits of Availing Enterlice’s Accounting & Auditing in the Netherlands
The Accounting & Auditing in the Netherlands service provided by Enterslice can benefit our clients in the following ways.
- Great understanding of the concept of money value
At Enterslice, our team is aware of the value of money and of each investment made by the entrepreneur in his business, due to which we strive to provide our clients with outstanding service provided at some of the most competitive costs.
- Exceptional Accounting Service in the Netherlands
While dealing with each of our clients, one of the vital reasons for our clients choosing us is our aim for optimized results and accuracy. As experts in Dutch tax legislation, we possess the knowledge to ascertain the optimal solutions for minimizing our client's taxation expenditures as much as possible, minimizing the general risks of their business. Each return made by us for our clients is reviewed carefully for precision.
- Periodical Planning
Even though we deliver all the services customary for auditing and Accounting in the Netherlands, we know that successful companies undertake periodic strategic planning. We can assist our clients with this type of planning, helping them devise a viable and strong financial plan. After achieving this, we can also help them in monitoring their progress along the way, making that their business stays on track and they achieve their targets.
- Great Reputation in the Netherlands
Another reason for our clients choosing us is our ability to build a reputation by working with various international and local businesses which come back each year for repeat business and which provide us with many referrals as a result of their successful collaboration with us. We are entirely committed to providing our clients with the most qualitative accounting services with minimum hassle; therefore, with time, we were able to establish a reputation which our clients have come to trust and value.
Main Accounting Standards in the Netherlands
The main accounting standards in the Netherlands are discussed below
- Companies registered in the Netherlandsand public companies registered abroad follow the International Financial Reporting Standards (IFRS);
- Small companies in the Netherlandscan make a choice between 2 main reporting systems; thus, a reporting system is based on the Dutch Civil Code (Book 2), Dutch Accounting Standards for Small Entities and the Dutch Accounting Standards for Medium-Sized and Large Entities;
- Anotherreporting system for small companies is provided by the IFRS Standards (the EU model) and the Dutch Accounting Standards for Medium Sized and Large Entities;
- Businesses operating as medium-sized companies can follow the Dutch Accounting Standards for Medium Sized and Large Entities;
- The latter type of companies may also perform theiraccounting procedures as per IFRS Standards (EU system), combined with the Dutch Accounting Standards.
Accounting and Auditing Obligations of Companies in the Netherlands
The companies must abide by the following accounting and auditing obligations in the Netherlands.
- The Obligation of Preparing Financial Statements in the Netherlands
Every Dutch corporate entity is obligated to prepare financial statements. This obligation follows the law and is usually incorporated in the statutes of the entity.
A foreign company with a branch in the Netherlands which has an obligation to file its financial statements in its home country must also file a copy with the Trade Register of the COC, i.e. Chamber of Commerce, where the main Dutch office is situated. Generally, a branch isn’t required to prepare its own (Dutch) financial statements. However, a standalone balance sheet and P&L can be required for tax purposes.
- The Relevance of the Financial Statements for Businesses In The Netherlands
The financial statements are an important building stone for the Dutch legal system and form the basis for corporate governance. The public can access the Trade Register is an important source of information in the Dutch marketplace. One of the major functions of the financial statements is the reporting to the shareholders. The shareholders must discharge the Board of Directors for their performance after accepting the financial statements. The secondary function is also important, which is creditor protection.
Virtually every corporate entity is obligated to get itself registered with the Trade Register of the Chamber of Commerce, followed by publishing certain financial annually, which forms an essential source of information for (prospective) clients, suppliers, partners and, obviously, the Dutch tax office.
The financial statements are also relevant for taxation. Although the tax laws have independent rules to ascertain the taxable basis, the financial statements are always the initial step.
The Content of the Financial Statements in the Netherlands
The publication requirements of a company can vary depending upon the size of the company; however, the general financial statements required for the accounting needs are discussed below.
- A Balance Sheet;
- A Profit &Loss account;
- Notes to the accounts.
Dutch GAAP Guidelines
The Dutch accounting rules are regulated by law. The GAAP Guidelines are mainly based on EU directives.
Dutch GAAP is applicable to a BV and an NV, and other entities, like, for example, the Cooperative Society. Special rules are applicable to financial institutions,stock-listed companies and insurance companies.
Although Dutch GAAP is different from International Financing Reporting Standards (IFRS), Dutch GAAP is in tune with IFRS continuingly.
W.e.f. 2005, all listed companies in the EU should apply to IFRS. The same is applicable to Dutch financial institutions and insurance companies. Dutch BV and non-listed NV, and other Dutch companies are permitted to apply to IFRS voluntarily, but this will automatically create the obligation of a statutory audit.
Accounting Principles in the Netherlands
Accounting principles require the financial information to be comprehendible, reliable, relevant and comparable. The financial statements should properly reflect the financial position of the company as per these principles.
The Balance Sheet, P&L account and notes must reflect and present fairly and consistently the equity at the balance sheet date and the profit for the year, and as far as possible, provide an insight into the solvability and liquidity of the company.
Companies forming a part of an international group can prepare their financial statements as per the accepted accounting standards in other EU member states only if reference thereto is made in the notes.
The accounting principles should be set out in the financial statements. These principles, once implemented, may only be changed if there are sufficient reasons for such a change. If there is a change, the reasons for this change and its effect on the company's financial position must be disclosed in the notes.
Dutch legislation states specific valuation and disclosure requirements, which the entrepreneur should comply with.
The required currency for reporting is Euro, but if justified by the company's activities or the international structure of its group, a company may do such reporting in a foreign currency.
Publication, Consolidation and Audit Requirements in the Netherlands
The Netherlands' publication, consolidation and audit requirements may differ depending on the company's size. A company is defined as either micro, small, medium or large, ascertained by the reference to the following criteria:
- Value of the balance sheet assets
- Net turnover, and
- of employees
The value of the assets, net revenue and the no. of employees of subsidiaries and group companies qualifying for consolidation must be included too.
- Publication Requirements in the Netherlands
It is important to prepare the financial statements and get them approved by the managing directors within 5 months after the end of the FY. An extension of maximum 5 months can be provided for the preparation of the financial statements at the shareholders' meeting. Hereinafter, the shareholders should adopt the financial statements within 2 months after the approval of the financials by the MDs. The deadline for publication will be then 12 months after the end of the FY. Finally, the company must file an abbreviated version of its balance sheet and notes thereto (the publication accounts) with the Chamber of Commerce for publication in the Trade Register no later than 8 days after the determination or approval of the financial statements by the shareholders.
If the company's shareholders are also the company's MDs, the approval date of the financial statements by the MDs will automatically be the adoption date by the shareholders. Consequently, the filing deadline for the publication accounts shall be 5 months (or 10 months if the extension period of 5 months applies) after the end of the FY plus 8 days.
Ø Consolidation Requirements in the Netherlands
Generally, the consolidated financial statements of parent companies must include the financial data of "controlled subsidiaries" and other "group companies."
As per the law, a "controlled subsidiary" is a legal entity in which the company can directly or indirectly exercise more than 50% of the voting rights at the shareholders' meeting or is authorized for the appointment or dismissal of more than half of the MD or Supervisory directors. A partnership wherein the company is a full partner also falls within the meaning of a subsidiary.
A "group company" is a partnership or legal entity that is part of a group of companies.
The main decisive factor in such consolidation is the (managerial) control over the entities, irrespective of the proportion of shares being held.
The financial data of a subsidiary or group company doesn’t need to be included in the consolidated financial statements if:
- The importance of such data is negligible in comparison to the group as a whole
- it is rather expensive or time-consuming to acquire financial information
- it is only held to alienate
There can be the omission of the consolidation if the subsidiary or group company is to be consolidated:
- Is able to satisfy the criteria for the description of a small company for Dutch Statutory purposes
- The company isn’t listed on a stock exchange
Other circumstances wherein the consolidation can be omitted are discussed below
- No written information has been received by the company regarding any objection against the non-consolidation within 6 months post the ending of FY by at least 1/10th of its members or by holders of at least 1/10th of its issued shares.
- The financial information which was required to be consolidated by the company is already included in the financial statements of its parent company.
- The preparation of these consolidated financial statements and the annual report is done as per the stipulations of the 7th EU Directive.
- The consolidated financial statements, the auditor's opinion and the annual report, insofar as these haven't been translated into Dutch, have been prepared or translated into German, French or English and are all in the same language.
- Within a period of 6 months of every balance sheet date or within 1 month of a permitted later publication, the translations or documents mentioned above have been filed at the offices of the trade register wherein the company is registered, or there has been the filing of a notice referring to the offices of the trade register where the same are available.
- Audit Requirements in the Netherlands
Only the medium and large companies and companies that apply IFRS should have their annual report audited by an independent, qualified and registered Dutch auditor. The appointment of the auditor is made by the general shareholders meeting, or in the occurrence of default, by the managing board or supervisory board
The audit report of the auditor must include the following points:
- Do the financial statements provide information as per the GAAP in the Netherlands and accurately represent the financial position and result for the financial year? The right judgement can be made as to the solvency and liquidity of the company;
- Does the management board's report meets the legal requirements; and
- Does adequate additional information have been provided?
The auditor reports to the managing and supervisory boards. Prior to the determination or approval of the financial statements, the competent body should have taken notice of the auditor's report. A Dutch company may opt for a voluntary audit if the audit is not obligatory.