‘Dutch GAAP is not IFRS light’: Stefan Betting RA on 5 pitfalls in annual reporting

Mastering Dutch GAAP in practice: what annual reporting in the Netherlands really requires

Dutch GAAP is often perceived as stable, familiar, and relatively straightforward. Yet in practice, many financial professionals continue to struggle with annual reporting in the Netherlands. Not because the rules are unclear, but because they are frequently underestimated.

According to drs. Stefan Betting RA, this underestimation is precisely what makes Dutch GAAP so relevant today. With frequent amendments, sector-specific rules, and legal consequences tied directly to accounting choices, Dutch GAAP demands a level of precision and judgment that many professionals overlook.

“Dutch GAAP is often viewed as ‘IFRS Light’, but it fundamentally relies on different conceptual frameworks in key areas.”
– Stefan Betting RA, owner of PROFEDA and specialist in (international) financial reporting

Dutch GAAP is more dynamic than many realize
Stefan Betting teaches a wide range of professionals, many of whom have a background in IFRS or US GAAP. Because they work for Dutch subsidiaries, they need to understand the ins and outs of Dutch GAAP. Many are surprised by how dynamic Dutch GAAP actually is.

“One of the most relevant topics in the Netherlands is, for example, the upcoming changes in pension accounting,” Betting explains. “Dutch GAAP also includes sector-specific rules, such as for banking and not-for-profit organizations. And Dutch GAAP is moving faster. Last year, there were more than twelve amendments. That is far more than under IFRS.”

When simplification turns into risk
From his teaching and advisory work, Betting sees a recurring pattern. “Financial professionals, particularly those accustomed to IFRS or tax-driven accounting, often underestimate the nuances of Dutch GAAP (Richtlijnen voor de Jaarverslaggeving, RJ).”

That simplification often leads to real-world consequences. “While Dutch GAAP is often viewed as ‘IFRS Light’, it fundamentally relies on different conceptual frameworks in key areas. When professionals oversimplify these differences, they expose companies to audit adjustments, dividend blocks, and breached bank covenants.”

Betting highlights five Dutch GAAP areas that are frequently oversimplified: The ‘Major Maintenance’ Provision, Lease Accounting, Revenue Recognition, Consolidation Exemptions (Art. 2:403 & 2:408), and Financial Instruments. In the box ‘5 Dutch GAAP pitfalls’ below, he breaks down the practical issues this can create. For each area, he outlines the common oversimplification, the underlying reality, and the problem it can lead to in practice.

5 Dutch GAAP pitfalls

1. The ‘Major Maintenance’ Provision

The Oversimplification:
“We can just take a fixed percentage of our maintenance budget and put it in a provision to smooth out our P&L.”

The Reality:
Dutch GAAP requires a detailed, asset-by-asset maintenance plan. You cannot simply provision a flat fee; it must be based on a quantified maintenance cycle (e.g., “The roof needs replacing every 10 years at a cost of €100k”).

The Problem:
If you treat this provision as a ‘profit smoother’ rather than a substantiated liability:

– Audit Failure: Auditors will demand the underlying maintenance plan. If it doesn’t exist, the provision must be released, creating a sudden, taxable profit spike.
– Component Accounting clash: Dutch GAAP allows a choice between the provision method and the ‘component approach’ (capitalizing maintenance). Professionals often flip-flop between these without realizing it constitutes a change in accounting policy, which requires retrospective correction.

2. Lease Accounting

The Oversimplification:
“We don’t need to put leases on the balance sheet because Dutch GAAP isn’t IFRS 16.”

The Reality:
While Dutch GAAP has not adopted IFRS 16 (which puts almost all leases on the balance sheet), it still requires a strict assessment of Financial vs. Operational Leases (similar to the old IAS 17). Professionals often look only at the legal title. If the title doesn’t pass, they classify it as operational (off-balance). However, the Dutch lease standard focuses on economic ownership. If the lease term covers the major part of the asset’s economic life, or if the present value of payments equals the fair value, it is a Finance Lease and must be on the balance sheet.

The Problem:
– Covenant Breach: Reclassifying a large ‘operational’ fleet or machinery lease to a ‘financial’ lease significantly increases debt. This can instantly trigger a breach of ‘Solvency’ or ‘EBITDA/Interest’ covenants with the bank.
– EBITDA Distortion: Incorrect classification keeps interest and depreciation in ‘Operating Expenses,’ artificially lowering EBITDA.

3. Revenue Recognition

The Oversimplification:
“We invoiced it, so it’s revenue.” or “Dutch GAAP basically follows IFRS 15 now.”
The Reality: The Dutch standard was updated to look like IFRS 15 (identifying performance obligations), but it retained a critical difference in the trigger for recognition.

– IFRS 15: Revenue is recognized when control is transferred.
– Dutch GAAP: Revenue is recognized when significant risks and rewards are transferred.

The Problem:
In complex projects (e.g., construction or software implementation):

– Timing Mismatch: You might have transferred ‘control’ (the client has the software key), but you still hold ‘risk’ (acceptance testing is pending). IFRS might book revenue; Dutch GAAP might force you to wait.
– Work in Progress (POC): Professionals often default to ‘Completed Contract’ (booking profit only at the end) to be prudent/conservative by hiding behind the veil of the zero profit method, although the performance can be tested, they are scared of booking profit too soon. However, Dutch GAAP requires the Percentage of Completion (POC) method unless the outcome cannot be reliably estimated. In that case, the zero profit method should be applied. Defaulting to ‘Completed Contract’ is not a ‘safe choice’; it is often an incorrect one that hides current performance.

4. Consolidation Exemptions (Art. 2:403 & 2:408)

The Oversimplification:
“We are a sub-holding, so we don’t need to consolidate.”

The Reality:
The ‘intermediate holding exemption’ (Art. 2:408) and the ‘group exemption’ (Art. 2:403) are not automatic rights; they are strictly conditional legal facilities.

– The 403-Statement: The parent must assume joint and several liability for the sub’s debts and file a specific declaration.
– The 408 Exemption: Shareholders must not object, and the parent’s consolidated accounts must be ‘equivalent’ to EU standards.

The Problem:
– Illegal Dividend Distributions: If a company fails to meet the strict administrative conditions (e.g., forgetting to file the translation of the parent’s accounts), the exemption is void. The company is then legally required to prepare consolidated accounts. If they haven’t, the adopted accounts are invalid. Consequently, any dividend distributions based on those invalid accounts are unlawful, and directors can be held personally liable.

5. Financial Instruments

The Oversimplification:
“We just value everything at cost price.”

The Reality:
Dutch GAAP is famous for allowing ‘Cost Price or Lower Market Value,’ avoiding the volatility of Fair Value accounting used in IFRS. However, professionals oversimplify this by ignoring derivatives (interest swaps, FX forwards).

The Problem:
– P&L Shock: A company with an interest rate swap might think, “We pay fixed, we receive floating, it nets out.” Without formal hedge documentation, if the market value of that swap drops, the loss hits the P&L immediately, while the underlying loan stays at cost. This creates massive, unhedged volatility in the P&L that does not reflect business reality, confusing stakeholders. That is why it is critical to document and test the hedge accounting requirements for hedge accounting regardless of the model: fair value, cash flow or cost price hedge. The last method can only be applied when using Dutch GAAP, IFRS prohibits cost price hedging.

Online Training | Annual Reporting in the Netherlands
Mastering Dutch GAAP: A Practical Online Training in Three Interactive Sessions
This English-taught online training (3 × 2 hours) is designed for professionals working with Dutch GAAP who want to deepen their understanding of Dutch accounting and reporting requirements. Through interactive sessions, real-life cases, and direct Q&A with expert Stefan Betting, participants gain the insight and confidence needed to apply Dutch GAAP correctly in practice.
View the program | Enroll now

Learning starts with your own questions
In his online training Annual reporting in the Netherlands, Betting deliberately leaves room for participant-driven depth. “The first session is fairly standard, but after that the content becomes tailor-made,” he says.

Participants are encouraged to bring in their own requests. “I go into detail on each topic they are dealing with, and how far we go is up to them. Sometimes I look into mergers and acquisitions, other times it is share-based payments, or whatever reporting challenge they are facing.”

For Betting, the course works best when it becomes interactive. “The course is always a success when participants bring their concerns, questions, or areas where they need guidance to the table. Because we meet weekly, I have sufficient time to meet their expectations.”

The questions that keep coming back
Asked which recent question made him think, this is something every Dutch GAAP professional should understand, yet many still overlook it, Stefan Betting does not hesitate. “To be honest, the 408 rule in practice can be a burden,” he says. “And last but not least, common control transactions too.”

What makes these topics tricky is not the theory, but the grey areas in day-to-day application. “In practice the lines are not always clear,” he explains. “Participants struggle with the different options, depending on the facts and circumstances, and with choosing the appropriate method. We are then talking about the purchase, the pooling of interests and carry over accounting methods.

In other words, even experienced professionals can find themselves stuck at the point where Dutch GAAP shifts from rules to professional judgment.

Meet your tutor drs. Stefan N. Betting RA
“I am a teacher at heart. With more than 200 training sessions per year since 2000, I can confidently say that I am doing what I truly enjoy. My expertise lies primarily in (international) external reporting, including Dutch GAAP, IFRS, and US GAAP. I also have extensive experience with Integrated Reporting and Sustainability Reporting.”

“For over 25 years, I have been teaching for a wide range of organizations, from Alex van Groningen to Sijthoff Accountants Academy and from the IIA to the VRC, with a primary focus on financial professionals. Since 2000, I have been affiliated with Nyenrode Business University as a freelance lecturer and examiner.”
Read more about his expertise and courses.

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