The Dutch accounting procedures and rules are described in a code of laws named Dutch Generally Accepted Accounting Principles (Dutch GAAP). Most of these principles are based on EU directives.
What types of companies does the Dutch GAAP apply for?
Dutch GAAP applies to a BVs, NVs and other types of entities, like for example certain forms of partnerships. Special rules apply to stock listed companies, financial institutions and to insurance companies.
BV is is an abbreviation from Besloten Vennootschap, a type of Dutch private limited liability company whereas NV comes from Naamloze vennootschap and represents public company owned by shareholders, but the company's shares are not registered to certain owners, and therefore they may be traded on the public stock market. The phrase Naamloze vennootschap literally means "nameless partnership" and comes from the fact that the partners (the shareholders) are not directly known.
Since 2005, IFRS (International Financing Reporting Standards) regulations apply to all listed companies in the EU, including insurance companies or financial institutions from the Netherlands. The Dutch GAAP is continuously adapted to the International Financing Reporting Standards.
All financial information provided by companies must be relevant, clear, reliable and comparable, and of course, in accordance with the accounting principles. The financial statements issued by each company must reflect the company’s position in relation with the principles mentioned above.
All companies must issue an annual balance sheet and profit and loss account together with notes.
A balance sheet is a financial statement that contains a company's assets, liabilities and shareholders' equity at a specific moment in time. These three balance sheet segments reflect the company’s state and give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.
The profit and loss statement totalizes the incomes and expenses covered by the company during a specific period of time - usually a fiscal quarter or year. These records provide information that shows a company’s ability of to generate profit by increasing revenue and reducing costs.
Both these declarations, the balance sheet and the profit and loss statement, must reflect the shareholders’ equity, the profit for the respective year, and information about the company’s solvability and liquidity.
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