New Dutch legislation in respect of annual accounts has been recently introduced. The new rules apply to legal entities which are subject to Title 9 of Book 2 of the Dutch Civil Code. The Bill implements Accounting Directive 2013/34/EU. The Accounting Directive replaces the Fourth and the Seventh EEC Directive. The Accounting Directive aims is to reduce administrative costs for small and medium-sized companies, facilitate the comparison of annual accounts and increase the transparency of payments to public bodies by companies in the extraction industry and primary forest logging. The Bill was published under the name Accounting Directive (Implementation) Act and will apply to financial years commencing on or after 1 January 2016. It is permitted to apply the new rules to financial years which started earlier.
The most important changes as formulated in the Bill are summarized below:
- The threshold amounts for determining whether a company is small, medium-sized or large (two of the three criteria must be met) are being increased: balance sheet total is increased to
≤ €6 million for small and ≤ €20 million for medium-sized companies and net turnover is increased to ≤ €12 million for small and ≤ €40 million for medium-sized companies. Also, an optional category is being introduced for very small companies (so-called micro-entities having a balance sheet total of ≤ € 350,000, net turnover of ≤ €700,000 and < 10 employees) to which the most exemptions apply. The increase of the thresholds for medium-sized companies also relaxes the rules for limitation of the number of non-executive and supervisory board seats on large N.V.’s and B.V.’s (see our Legal Flash of 9 October 2015).
- The extension of the deadline for preparing the annual accounts is being reduced by one month and the final publication deadline is being changed from 13 months to 12 months.
- The term 'annual report' (jaarverslag) is being replaced by the term 'management report' (bestuursverslag).
- Goodwill which has arisen on the acquisition of an associated participation can no longer be written off against equity or the profit and loss account. It is no longer allowed to capitalize research expenses.
- Due to the implementation of the EU definition of public-interest entities (or PIEs, i.e. companies whose securities are traded on a regulated market of a Member State and licensed credit institutions and insurance companies) Dutch companies whose securities are traded on an unregulated market in the EU or on any market outside the EU may benefit from the exemptions based on the small or medium-size company regime, which until now was not permitted.
For a full description of the amendments pursuant to the Accounting Directive (Implementation) Act and certain other bills, click here for our newsletter Quoted edition 105.