According to the accounting law in the Netherlands, it is compulsory for every company or other type of corporate entity to submit annual financial statements. In a balance sheet, the company must report on its assets, liabilities and the equity of each owner and must meet the accounting requirements that are established under the local legislation.
The procedure of audit in the Netherlands has to include a set of documents and our Dutch accountants, who have an in-depth experience in performing audit procedures for all types of companies, can advise on the main accounting documents that have to be submitted in this case.
If the company is foreign, the financial statements must be deposited in the origin country and with the Trade Register of the Chamber of Commerce where the main Dutch office is located. In case you have a business elsewhere and you have opened a branch office in the Netherlands, the law usually does not require financial statements, because the branch office is not considered an independent legal structure from its parent company abroad.
Audit for small, medium and large companies in the Netherlands
Depending on the size of the company (micro, small, medium or large), the publication, consolidation andaudit requirementsdiffer. The size of the company is determined by reference to the value of the balance sheet assets, the net turnover and the number of employees.
In order to be considered a micro company the total value of the assets of a business must be less than EUR 350,000 and the company can have up to 9 employees. The net turnover for a company which is considered small can be of maximum EUR 12 million and the enterprise can hire up to 50 persons.
The following video offers a short presentation on the audit requirements in the Netherlands:
The laws for audit in the Netherlands stipulate that only medium and large companies must create an annual financial reportaudited by an independent, qualified and registered auditor, from a Dutch accounting firm. Since 2016, the thresholds for the classification of the companies in small, medium and large have increased, thus making many previous large companies to be considered medium or small according the new law.
Since the requirements for smaller companies are lighter, this represented an advantage in terms of accounting for many business owners. As such, a small company will only have to provide an abridged balance sheet and abridged explanatory notes. Medium companies must file a balance sheet abridged to some extent, an abridged profit and loss account, detailed explanatory notes and an annual report.
This auditor is chosen and approved either by the general shareholders meeting, the supervisory board or the managing board of the company. The supervisory or managing boards must first read the auditor’s report and then approve the financial statements. Our team of Dutch accountantscan provide in-depth information regarding this aspect.
What are the audit requirements in the Netherlands?
The auditor’s report must verify if a set of conditions are met. For example, the appointed person must verify if the financial statements contain information in accordance with the principles of accounting firms in the Netherlands and if the financial statements contain accurate information about the financial situation for the respective year. At the same time, the auditor must verify if the management board’s report respects the legal requirements and if the report includes any important additional information.
Starting with the 11th of December 2012, according to the accounting law in the Netherlands adopted by the First Chamber of the Dutch Parliament, anaccounting firm in the Netherlands may provide audit services to a company or any type of corporate entity for no more than 8 consecutive years.
Since January 2016 the EU Accounting Implementation Act has introduced several modifications in terms of simplification and modernization of the financial reports and their filing procedure. The annual accounts must be prepared at latest in the fifth month after the end of the financial year and filed with the Dutch Trade Register within maximum 12 months. A delay is punishable by a fine of EUR 20,250 and can also attract the dissolution of the company.
The same law also states that audit firms must separate audit and advisory services, and therefore they can’t provide both audit and advisory services to a corporate entity. Public interest organizations must give a prior notification to theAuthority for Financial Markets (AFM) about their intention to appoint an accounting firm for performing audits.
What does the financial statement contain in the Netherlands?
A financial statement represents an accounting document that records the financial activities of a company registered in the Netherlands. A financial statement is comprised of several other documents and our team of accountants in the Netherlands can provide an in-depth presentation regarding such documents, which are shortly presented below:
• the balance sheet – it is the main document which prescribes the current situation of the assets and liabilities of the respective company that is audited in the Netherlands;
• the cash flow statement – it prescribes the current financial situation of the company’s operating activities, as well as its financing and investment matters;
• the profit and loss account – it presents the company’s net profit and loss;
• the director’s report – a document that must be filed only by large companies and which is completed by the board of directors, presenting the general financial situation of the business.
What are the main accounting regulations in the Netherlands?
The accounting principles that are developed in the Netherlands are regulated by the Dutch Generally Accepted Accounting Principles (GAAP), which are created following the European Union’s legislation on the matter. At the same time, it is necessary to know that numerous accounting principles established under theDutch GAAP are compatible with the International Financing Reporting Standards (IFRS).
In the case of businesses operating in the Netherlands that are part of an international group of companies registered in the EU, they may also provide their financial statements following the accounting legislation in the respective EU states. However, this option has to be mentioned in the notes attached to the company’s financial statements; our accounting firm in the Netherlands may offer further advice concerning this aspect.
For more details on this topic and personalized consultancy for your business please contact our accounting firm in the Netherlands.Our Dutch accountants can offer in-depth information concerning the audit procedures available for your type of company operating in the Netherlands and can also advise on any other accounting procedure applicable here.
*Click on the categories below for full list of articles