Statutory Dutch audit requirements
Dutch Accounting and Auditing are crucial components in running a successful business in the Netherlands, not only because of statutory compliance to the Netherlands Audit system but also because of the opportunity to qualify for various government aids, loans and subsidies.
When it comes to statutory Dutch audit requirements as specified by the existing government regulations, the following rules apply:
- For businesses with a total balance of at least 6 million Euro, and/or
- For businesses with at least 50 full time working employees, and/or
- For businesses with a net revenue of at least 12 million Euro.
For businesses where any two of the three criteria mentioned above are applicable for two consecutive years, regular audits in the Netherlands are mandatory.
For Accounting and Financial Statements
The Dutch government Audit regulations prevalent in the Netherlands make it mandatory for every corporate entity to prepare and maintain regular financial statements.
In the case of a foreign company operating in the Netherlands, it is required to file a copy of its annual accounts in its home country in the TRCC in the Netherlands. A branch of a parent company is generally exempted from this rule of Audit in the Netherlands.
Financial Statements in the Netherlands according to Dutch Audit Rules generally consist of a balance sheet, a profit and loss accounting statement and notes to the accounts, where applicable.
All accounting rules and practices specific to Dutch Audit carried on in the Netherlands are primarily regulated by Law. The Dutch Generally Accepted Accounting Principles are built on the foundation of the European Union directives. They apply to any BV, NV and other organizational entities as well, including partnerships.
Special regulatory laws of Dutch Audit related GAAP are applicable limited to companies that have their stock listed in exchanges, financial institutions and insurance companies.
Though Dutch GAAP still differs from International Financing Reporting Standards (IFRS), Dutch GAAP is brought in line with IFRS on a continuing basis. As from 2005, all listed companies in the EU should apply to IFRS while conducting their audit in the Netherlands. The same applies to Dutch financial institutions and insurance companies.
Clarity regarding the financial position of a company should be well reflected fairly and consistently in the financial statements of the company adhering to Dutch Audit rules. Presentation of the Company’s solvability and liquidity is also an important aspect that needs to reflect in the financial statements. International Companies are allowed to report their Dutch Audited statements stated in financial currency of the mother company in the Netherlands. Companies in the Netherlands are classified according to their size, and the statutory requirements for publishing the statements vary, depending upon whether the business is classified as small, medium or large. Small companies are usually exempted from publication requirements of Dutch Audits.