Accounting in the Netherlands: Reporting standards owners should know
A company is required to record all the financial transactions and keep the recordings. These procedures refer to accounting. We need accounting to adequately see the financial position of the company and show a tax base to the state.
Accounting for small businesses is usually simpler than for bigger companies. It works for the Netherlands as well. In this article, we deal with a Dutch accounting - what to record, when to file and how to do it well and efficiently.
Self-Check: Is My Business Small
Under the Dutch Civil Code (DCC 2:395a, 2:396 and 2:397) companies are categorized as micro or small businesses if they satisfy at least two out of three following criteria for two consecutive years:
If your company satisfies the criteria, congrats! You’ll have simplified accounting standards until you grow out. In practice, it means that you file a shorter annual report and submit VAT returns less frequently. An audit is not legally required.
What to Record: Invoicing
The most common units to record are invoices or receipts which reflect your company’s transactions with suppliers and customers. As you run a digital business, you probably choose invoices. An invoice should contain all the necessary information about the transaction including VAT.
On Enty you can use invoice templates created by professional accountants and verified by lawyers. Under the law, invoices should be maintained in a company at least for 7 years. Thus, it’s worth having a convenient invoice management system.
VAT Return: Monthly, quarterly, or yearly
Every company in the Netherlands has to file VAT returns but there are several exceptions: education, sport clubs, home care, and some others are exempted from VAT.
Otherwise, you charge VAT, pay it, and complete VAT returns. VAT return is a document that displays how much VAT your customers and your company itself paid.
To know the frequency of filing VAT returns, you have to calculate it. Most commonly, companies in the Netherlands file VAT returns quarterly. If your VAT turnover exceeds a €15,000 mark within a quarter, you’ll start filling monthly returns.
In contrast, if your VAT amount tends to much smaller numbers, you can file returns once a year. Your company should be liable for less than €1,883 a year for using this scheme. You can change the frequency of filing VAT returns, by contacting Tax and Customs Administration here.
No matter how you file VAT returns, the deadline for reporting is the last day of the month following the period's end. Yearly VAT return is due on 31st March of the following year.
The same deadlines apply to according VAT payments. You can both pay it and submit VAT returns digitally online. When you do not submit a VAT return on time, you’ll be fined €65. For repeated late submission, a fine will grow to €131, whereas a threshold for misdeclaration and late filings in the Netherlands is about € 5,000 now.
CIT Return for Dutch Companies
Every company is required to pay Corporate Income Tax (CIT) and file a CIT return annually. Previously, we’ve reviewed in the blog how to calculate CIT, and what are the rates and exemptions.
Under Dutch law, a company should file a CIT return within five months after the end of its financial year. Besides, you can apply for an extension of the filing due date through this form on the Tax and Customs Administration.
Dutch authorities conduct provisional and final assessments of the corporate taxpayers. The final assessment must be conducted within three years following the company’s financial year it concerns.
If a company’s got CIT assessed, it must be paid within two months from the date of assessment. In this case, a company also pays interest. It’s calculated from six months following the financial year and varies with a minimum 8% rate.
If you’re a ZZP then you have to file an Income Tax Return instead of a CIT return, which in fact is exactly the same report.
How Accounting Works on Enty
Enty is a single Control Panel for back-office processes, thus you can get accounting, invoicing, and online banking at once. When you use Enty invoicing and banking solutions, the information for an accountant is collected automatically. When not, you just upload the document to Control Panel.
Our accounting subscription plans include:
VAT Return (quarterly)
CIT Return
Payroll for 1 employee
Consultation with an accountant
In the end, all that you need is to upload the external documents on time. Our accountant will take care of the other things!
