An overview of financial reporting in the Netherlands - PwC

[Pages:124]An overview of financial reporting in the Netherlands

February 2020

An overview of financial reporting in the Netherlands 1

`Welcome to the latest edition of An overview of financial reporting in the Netherlands. As the title already suggests, this booklet provides a general overview of the existing requirements. If you are in need of more information, our advisors will be very happy to assist you on an individual basis. On behalf of PwC Accountants, we hope that you will find this booklet useful.'

An overview of financial reporting in the Netherlands

February 2020

This booklet is for those who wish to gain a broad understanding of financial reporting in the Netherlands. It is not comprehensive. The legislation on reporting is sometimes extremely complicated and changeable. We accept no responsibility for what one undertakes without expert advice in response to the content of this booklet. While every effort has been made to ensure accuracy, information contained in this booklet may not be comprehensive or details that are relevant to a particular reader may have been omitted. In particular, this booklet is not intended as a study of all aspects of Dutch GAAP, or as a substitute for reading the Dutch law, the Dutch Accounting Standards, and any interpretations and/or judicial decisions when dealing with specific issues. No responsibility for loss to any person acting or refraining from acting as a result of any material in this checklist can be accepted by PricewaterhouseCoopers. Recipients should not act based on this booklet without seeking professional advice.

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Contents

Preface

7

1.Legal framework

9

1.1 The bv and the nv

10

1.2 Setting up a business

11

1.3 Relevant corporate bodies of a company

14

1.4 To be in compliance

18

1.5 Employee benefits

20

1.6 Share capital and dividend payments

23

1.7 Corporate governance

27

2. Requirements for annual reports

31

2.1 The composition of the annual report

32

2.2 The size of a company matters

34

2.3 Keeping the books and preparation of the financial statements

35

2.4 Filing of the annual report

36

2.5 Formats of financial statements

38

2.6 Notes to the financial statements

43

3. The core accounting principles under Dutch GAAP

47

3.1 General principles

48

3.2 Principles on the recognition and measurement of various items

49

3.3 Equity and reserves

54

3.4 A change in accounting policy, change in accounting estimate

or a prior period error?

57

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4. Consolidated financial statements

59

4.1 Definitions and accounting principles

60

4.2 Consolidation and exemption from consolidation (Article 2:407 DCC)

62

4.3 Consolidation exemption for intermediate holding companies

(Article 2:408 DCC)

63

4.4 Group exemption (Article 2:403 DCC)

65

4.5 Format and content of consolidated accounts

67

5. IFRS in Dutch financial statements

69

5.1 To apply IFRS in the Netherlands

70

5.2 Options available for the consolidated and company financial statements 71

5.3 Parts of Dutch law are still relevant for IFRS appliers in the Netherlands 73

5.4 Overview of the key differences between Dutch GAAP and IFRS

74

6. Company taxation

79

6.1 Resident and non-resident taxpayers

80

6.2 Corporate income tax

81

6.3 Capital tax

87

6.4 Interest and royalty withholding tax

87

6.5 Dividend withholding tax

87

6.6 VAT

88

6.7 Payroll taxes

89

6.8 Reporting requirements

90

6.9 Tax rulings and Tax Authorities

91

Appendices

93

Appendix A - Book 2, Title 9 Dutch Civil Code (unofficial translation)

94

Appendix B - Terminology

118

Appendix C - Authors

122

An overview of financial reporting in the Netherlands 5

Renick van Oosterbosch

Hugo van den Ende

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Maran Smit

Preface

This booklet has been written with the needs of the foreign investor (including multinationals with intermediate holdings) in the Netherlands in mind and aims to address many of the recurring questions raised by clients in practice.

It is not intended to be a detailed work of reference, but rather an accessible overview of financial reporting for limited liability companies in the Netherlands, including relevant aspects of law, and for existing investors who need, or wish to have, a basic understanding of the key aspects of establishing and operating a company in the Netherlands.

Industry specific legislation with regard to banks, insurance and investment companies and other financial institutions is not included in this book. This is also the case for any special rules that are applicable for entities, such as co-operatives, associations, governmental and public sector organisations.

In this book, we refer to Dutch GAAP, which covers: The Dutch Civil Code, Book 2 Title 9 (`DCC'), plus: ? The General Administrative Order on model formats

(`Besluit modellen jaarrekening' ?`GAO on model formats'); ? The Decree on valuations (`Besluit actuele waarde'); and ? The Dutch Accounting Standards (`Richtlijnen voor de jaarverslaggeving').

Dutch company law is part of the Dutch Civil Code. The legal provisions relating to entities limited by shares in the Netherlands are included in Book 2 of the Code, which contains legal provisions relating to all legal persons and entities, including co-operatives and associations, as well as limited liability entities.

The Dutch Accounting Standards have no legal force but provide more detailed guidance on the interpretation of the law and in areas that are not specifically covered by the DCC. In practice, the Dutch Accounting Standards form an important part of the Dutch Generally Accepted Accounting Principles, which has been confirmed in a number of legal cases. We based our booklet on Dutch Law and the 2019 version of the DAS, which is applicable for financial statements on annual periods beginning on or after 1 January 2020.

We are indebted to a number of colleagues for their commitment to read and check chapters of this book and for providing constructive comments: Kevin Bernadina, Arjan Brouwer, Jos de Groot, Michiel Lohman and Jeroen Tuithof. Specific knowledge was provided for the preparation of the chapters on legal aspects and taxation. Therefore, we would like to thank Tom de Regter for reviewing the legal content of this booklet; and June Mentens and Mariska van der Maas of our Tax department for their help.

The online version of this booklet can be accessed via the Dutch branch of rm..

Enquiries concerning the contents of this booklet may be addressed to your contact at PwC.

PricewaterhouseCoopers Accountants N.V. National Office

Hugo van den Ende Renick van Oosterbosch Maran Smit

Amsterdam, February 2020

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