Consolidated annual accounts
The annual accounts in which a group is presented as one economic entity. Mandatory for parent companies, with exemptions for small groups.
What do consolidated annual accounts mean?
The annual accounts in which a group is presented as one economic entity. Mandatory for parent companies, with exemptions for small groups.
The consolidated annual accounts show the financial position and performance of the group. They sit alongside the parent's company annual accounts. The scope of consolidation and the exemptions follow from specific provisions of Book 2 DCC.
How does it work?
In the consolidated annual accounts, the assets, liabilities, income and expenses of the group are included as a whole (art. 2:405(1) DCC). The group head is obliged; an intermediate holding consolidates its part of the group (art. 2:406(1) and (2) DCC). The consolidated annual accounts are part of the annual accounts (art. 2:361(1) DCC) and are adopted and filed together with them.
With full consolidation, all items of the subsidiary count for 100%, intra-group receivables, debts, turnover and costs drop out and the participating interest is eliminated against the subsidiary's equity. The share of third parties is stated separately (art. 2:411(2) DCC). Exempt are the small group (art. 2:407(2) DCC) and the intermediate holding that is consolidated higher up in the group (art. 2:408(1) DCC).
Example
Holding BV owns all shares in Werk BV. Holding: participating interest € 150.000, receivable from Werk BV € 40.000, bank € 10.000; equity € 200.000. Werk BV: assets € 400.000, debt to Holding € 40.000, other debts € 210.000, equity € 150.000. Added together, the balance sheet total is € 600.000, consolidated € 410.000: the participating interest drops out against Werk BV's equity and the intra-group receivable against the debt. The management fee of € 30.000 that Holding charges Werk BV disappears from both turnover and costs.
In the annual accounts
Group balance sheet, group P&L and notes where consolidation is required.
Difference from the company annual accounts
The company annual accounts show the entity itself; the subsidiary appears in them as a single line, the participating interest. The consolidated accounts replace that line with the underlying assets and debts. Statutory reserves exist only in the company accounts (art. 2:410(1) DCC) and a dividend resolution is tested against the company figures.
Common mistakes
- Leaving intra-group turnover in
- Comparing company and consolidated result without explanation
What to watch for
- First determine the scope of consolidation: control counts (art. 2:24a DCC), not only the percentage of shares.
- The exemption for small groups lapses if a group company is a public-interest entity or the general meeting objects in writing within six months after the start of the financial year.
- Reconcile intra-group current account balances before you eliminate; otherwise a difference remains in the group balance sheet.
Legal basis and source
art. 2:405–408 DCC
Frequently asked questions
Must a holding with one operating company consolidate?
Usually not. If the group as a whole stays within the limits for small entities, consolidation may be omitted under article 2:407(2) DCC.
What happens to profit on intra-group deliveries?
It is eliminated as long as the goods have not left the group. If inventory sold within the group with € 5.000 profit is still there at the balance sheet date, group profit is € 5.000 lower.
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Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
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