Dutch large legal entities and public-interest entities active in the extractive and primary forest logging sector are required to publish an annual report on payments to governments as from the financial year starting on or after 1 January 2016. The new legislation implements chapter 10 of the Accounting Directive (2013/34/EU) and article 1(5) of Directive 2013/50/EU amending the Transparency Directive (2004/109/EC) and is laid down in section 2:392a of the Dutch Civil Code (DCC), section 5:25e of the Dutch Financial Supervision Act and the Report on Payments to Government Decree (Decree). The objective of this legislation is to improve the quality of life of the people of resource-rich countries and to raise global standards of transparency in these industries.

Under the Decree, Dutch large legal entities and Dutch entities whose securities are traded on a regulated market in the EU and in respect of whom the Netherlands act as Member State of origin (issuing institutions)1, in the extractive and primary forest logging sector are required to prepare an annual report, in which the following information on (single or related) payments over EUR 100,000 or payments in kind to all layers of government, including national, regional and local authorities, is included:

  • the total amount of payments made to each government;
  • the total amount per type of payment, such as production entitlements, certain taxes, royalties, dividends, bonuses, license or concession fees and payments for infrastructure improvements, to each government;
  • if these payments have been attributed to a specific project, what they have been attributed to, including the total amount per type of payment made for each project and the total amount of payments for each such project (no such specification is required if it concerns payment obligations of the entity); and
  • where payments in kind are made, the value (including supporting notes how the value has been determined) and, where applicable, the volume of that payment.

The report must be published within 6 months following the financial year by issuing institutions by means of filing with the AFM and within 12 months following the financial year by Dutch large legal entities (not being an issuing institution) by means of filing with the Trade Register. This report is not subject to a statutory audit.

As of 1 January 2016, a Dutch legal entity qualifies as large if on two successive balance sheet dates (without subsequent interruption on two successive balance sheet dates), it meets at least two of the following criteria: (1) the value of the entity’s assets according to its balance sheet with explanatory notes, on the basis of the purchase price or manufacturing costs exceeds €20 million; (2) the annual net turnover exceeds €40 million; and (3) the average number of employees during the financial year is 250 or more. These criteria must be measured on a consolidated basis, unless the entity is exempted from preparing consolidated accounts under section 2:408 DCC (intermediate holding exemption).

If a parent company in a Member State prepares consolidated accounts, including one or more entities in the extractive or primary forest logging sector, it must also publish a consolidated report on government payments. These entities are then exempted from preparing their own report.