As of November 1, 2015, Book 2 of the Dutch Civil Code (BW) has been amended for annual accounts and their publication periods. A new category of enterprise has been introduced: micro-enterprises. The criteria for small, medium, and large enterprises have been adjusted. The traditional 13-month publication period has been shortened to 12 months. The preparation period has been shortened to 10 months. Finally, enterprises in certain sectors are subject to an additional publication obligation regarding payments made to government bodies.

The changes will apply to fiscal years starting January 1, 2016. They may be applied earlier to take advantage of the new exemptions.

Think Small First

The Implementation Act Annual Accounts Directive, adopted September 30, 2015, effective November 1, 2015, implements the European directive which aims to reduce administrative burdens. The focus is on small and medium-sized enterprises (SMEs), which play a central role in the Union's economy. This focus is encapsulated in the adage "think small first," which serves as the basis for the European Commission's policy in its legislative agenda. This has translated into the introduction of "micro-enterprises." Micro-enterprises have limited resources to meet the demanding regulatory requirements. They are not entirely exempt from publication requirements, so that sufficient transparency is maintained over their business transactions and financial situation to protect stakeholders. The question is whether accountants will now also charge less for their work!

Exemptions

The following categories of companies are distinguished:

A company may apply the exemptions if it meets two of the three criteria for two consecutive years. A company falls into a larger category if it subsequently meets the conditions of that (larger) category for two consecutive years. The table below illustrates this: the first line indicates how a company qualifies in a given financial year, the second line indicates which exemption regime it may apply (note: year 1 is ignored, as separate conditions apply for that year):

The exemptions are, in general terms, as follows:

The further limitation in accounting for microenterprises compared to small businesses primarily concerns even fewer items in the balance sheet and profit and loss account. Moreover, these items may often be consolidated, for example, all debts are reported under a single item. Explanatory notes may also be omitted.

Small businesses are required to report less: this restriction relates, among other things, to the omission of disclosures about investments and the omission of the indication of profit certificates and profit allocation.

Listed companies, credit institutions, insurers and other public interest entities to be designated are not eligible for the aforementioned exemptions.

The Management Report is the new name for the annual report. The report is subject to the auditor's review, which requires the auditor to detect and report any material misstatements in their report.

Stop it! Special statement regarding payments to governments

Some companies will be subject to additional reporting requirements. These are large, publicly traded companies active in the extractive industry or the logging of primary forests. They must report on payments they make to the governments of the countries where they operate (so-called country-by-country reportingThe aim of this regulation is ambitious: to increase transparency about such payments, to increase pressure on governments of resource-rich countries to disclose the use of resources and the expenditure of those revenues, to reduce corruption and bribery, thereby promoting good governance and political stability in the countries involved, and to obtain more information about investors in this industry.

The reporting covers payments for production rights, taxes, and royalties and is presented in a separate report, separate from the annual accounts and management report. It is, however, published in the same way as the annual accounts through the Chamber of Commerce trade register.

Further details of this obligation will be provided by general administrative order. The law also allows for the designation of companies in sectors other than the extractive industry or logging, although draft AMVB does not go further than this for the time being.

Please note: new terms

For legal entities subject to a publication obligation, the deadline for filing and publishing annual accounts with the Chamber of Commerce has been shortened. Previously, the absolute deadline was 13 months after the end of the financial year. This has been shortened to 12 months for private limited companies (BVs), public limited companies (NVs), and business-like foundations, associations, cooperatives, and mutual insurance companies.

This reduction is reflected in a shorter deadline within which the annual accounts must be prepared by the board: 10 months. The boards of a private or public limited company (BV) must submit the annual accounts to the general meeting within 5 months after the end of the financial year, which deadline can be extended by a maximum of 5 months (instead of 6). For business-operating foundations, associations, cooperatives, and mutual insurance companies, an initial deadline of 6 months applies, extendable by a maximum of 4 months (previously 5). The general meeting, members' meeting, or other authorized body has a maximum of two months to approve the annual accounts. If it approves them sooner, the approved annual accounts must still be published within 8 days of approval. The deadlines are as follows:

Entry into force

The changes will take effect on 1 November 2015 and will first be mandatory for annual accounts with a financial year starting on 1 January 2016. Companies are free to apply the new rules to annual accounts with a financial year ending 2015, so that they can make use of any exemptions earlier or can already report on payments made to government bodies.