The recently enacted Accounting Directive Implementation Act (Uit- voeringswet richtlijn jaarrekening) (the ‘Implementation Act’) provides for several amendments to legislative publication and filing requirements for annual accounts of Dutch legal entities (rechtspersonen). By the Implementation Act, the European Accounting Directive (2013/35/EU) is implemented in the Dutch Civil Code (Burgerlijk Wetboek). The new regime must be applied to annual accounts with book years starting on or after 1 January 2016, but may also be applied to annual accounts over book years commencing before this date. In this newsletter, we would like to inform you about the most significant changes to Dutch accounting law.
Shorter extension and filing period
Currently, annual accounts of legal entities must be prepared within five (for private or public companies with limited liability) or six (for associations, cooperatives and foundations) months after the end of a book year, unless this period is extended. Although these maximum initial periods remain unchanged, the Implementation Act shortens the maximum extension period with one month. As a consequence, the maximum extension period for private or public companies with limited liability will be five instead of six months, and for associations, coopera- tives and foundations this term will be four instead of five months.
Once the annual accounts have been prepared, they must be adopted by the relevant body (for instance: its general meeting) within two months thereafter. In principle, the adopted annual accounts need to be filed with the Dutch Chamber of Commerce within eight days after adoption, but ultimately within thirteen months after the end of the book year. With the enactment of the Implementation Act, this ultimate term for filing of thirteen months is shortened to twelve months for all Dutch legal entities.
Increase of thresholds and introduction of micro-undertaking
Bigger enterprises need to comply with more extensive accounting and publication requirements than smaller enterprises. Before the enactment of the Implementation Act, enterprises were divided into three cate- gories: the small, the medium-sized and the large enterprise. In order to fall into a certain category, an enterprise had to meet two of the following three criteria during two subsequent years:
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The Implementation Act provides for an increase of the above thresholds and the introduction of a new category: the so-called micro-unertaking. Consequently, much less companies will fall into the higher categories and be subject to strict accounting rules. From 1 January 2016, a company will fall into the following category if it meets two of the following three criteria during two subsequent years:
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Micro-undertakings are subject to less stringent requirements than the current small legal entity: a brief balance sheet and brief income statement is sufficient.
Organisations of public interest
In the Implementation Act, it is stipulated that organisations of public interest (organisaties van openbaar belang) (‘OPIs’) may not use any exemption from accounting reporting obligations (including the so- called 403-exemption) and are not allowed to prepare simplified annual accounts, even though the annual accounts of such OPIs have already been included by a parent company in the consolidated annual accounts of the group. OPIs are legal entities whose securities are admitted to trading on a regulated market, credit institutions, insurance companies and (other kinds) of companies which are designated as such.
Report about payments to governments
The Implementation Act introduces the ability of the government to formulate additional rules with respect to the preparation of the annual accounts of legal entities that are active in certain sectors. The main objective of this amendment is to oblige large enterprises that are active in the extractive industry and in primary forest logging to disclose a report with an overview of the payments made to governments of countries in which these enterprises are active. Such reports will need to be disclosed in the same way as, but independently of, the annual accounts and management report.
Other (technical) amendments
The Implementation Act also provides for a number of less significant and/or technical amendments that will not be discussed in detail in this memorandum. An example of such technical amendment is that micro-enterprises may not value their assets at their net value and that, as from 1 January 2016, the annual statement of the board (jaarverslag) will be called the management report (bestuursverslag).
Furthermore, a requirement for external auditors of legal entities will be introduced to investigate whether, based on his knowledge and understanding about the legal entity and its’ environment, the annual accounts contain material misstatements. Furthermore, as from 1 January 2016, acquired goodwill must be capitalized, and amortized in accordance with the expected operating time. Only under exceptional circumstances acquired goodwill can, in deviation of this rule, be amortized in ten years.