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Accounting in the Netherlands: What a small business owner should know about Reporting Standards

May 12, 2022 · 5 min read

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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.
Get started with Enty: Invoicing and 2+ services in one

Annual Report in the Netherlands

During the year a company maintains accounting records. Then a year ends, and the company files an annual report. Basically, it is a set of financial statements prepared in accordance with accepted accounting principles and intended to form a well-grounded opinion of the company’s equity and results.

After the end of the year, you have to prepare the financial statements within 5 months. Then these financial statements should be adopted by the general meeting, i.e. be signed by the shareholders within 2 months of the date of preparation. If all the shareholders are also directors, they just sign off an annual report and it automatically means the adoption of it.
You should file the financial statements within 8 days of the date of adoption, but no later than 2 months after its preparation.

An annual report for small businesses consists of the following documents:

  1. a balance sheet;
  2. a profit and loss account;
  3. a cash flow statement;
  4. notes to the balance sheet and the profit and loss account.

When your company enters a bigger business category, you add to these financial statements a directors’ report and an auditor’s report. Right up to that you, small businesses can just file an abbreviated balance sheet and notes.

You can prepare financial statements based on tax accounting principles as well. As a non-listed company, you have a choice of accounting principles to apply is either Dutch GAAP or IFRS-EU. Two standards differ in the approach, for example, to such matters as a pension plan.
Another option is a language. Apart from Dutch, you can prepare an annual report in English, French, or German. Still, you will probably need a bit of Dutch to file the report with the Netherlands Chamber of Commerce (KVK).

On Enty a professional accountant prepares and submits an annual report on behalf of your company. If you are using Enty’s Invoicing and Open Banking, you don’t even need to upload a gigantic set of documents. All the data is already on your company’s Control Panel.

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.

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:

  • Annual Report
  • 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!

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