Matching principle (matchingbeginsel)
Costs are allocated to the period in which the related revenue is recognised, so that income and expenses fall in the same financial year.
What does the matching principle mean?
Costs are allocated to the period in which the related revenue is recognised, so that income and expenses fall in the same financial year.
Income and expenses are allocated as far as possible to the period to which they relate. Among other things, accrual items and inventory valuation are used for this. The principle does not override specific statutory valuation rules.
How does it work?
The statutory core: income and expenses of the financial year are included in the annual accounts, regardless of whether they led to receipts or payments in that year (art. 2:362(5) DCC). RJ 135 elaborates this in the accrual principle: expenses connected with the entity's performance are allocated to the period in which the income from that performance is recognised. The purchase price of goods for resale therefore becomes an expense only once the goods are sold.
Costs without identifiable revenue, such as rent and insurance, are allocated to the period in which they are consumed. Profits are recognised only when realised, while obligations originating before the end of the financial year are already taken into account as soon as they are known (art. 2:384(2) DCC).
Example
An events agency (BV) pays € 18.000 rent for an exhibition hall in November 2026 and receives € 30.000 from participants in December; the fair is in February 2027. On a cash basis, 2026 shows € 12.000 profit and 2027 nothing. With allocation, on 31 December 2026 € 18.000 stands as prepaid costs under prepayments and € 30.000 as income received in advance under deferred income. In 2027 both fall into the result: revenue € 30.000, costs € 18.000, profit € 12.000 in the year of the performance.
In the annual accounts
P&L for period allocation; balance sheet for amounts not yet allocated.
Difference from the realisation principle
The realisation principle determines when revenue may be recognised: when it is realised. The matching principle then determines which costs belong in that same year. An expected loss does not wait for that: out of prudence it is recognised immediately.
Common mistakes
- Booking everything on a cash basis
- Capitalising an expenditure without future benefit
What to watch for
- In January, go through the bank statements and invoices for amounts that straddle the year boundary: rent, insurance, subscriptions, interest, bonuses. The year-end closing checklist lists the usual items.
- Micro: accrual items for other operating costs may be omitted, provided this is stated at the foot of the balance sheet (art. 2:395a(3) DCC). From small upwards, everything is allocated.
- Income and expenses that must be allocated to another financial year are explained by nature and size (art. 2:377(7) DCC).
Legal basis and source
art. 2:362 and 2:384 DCC
Frequently asked questions
May I still book an invoice from January in the old year?
Yes, if the service was delivered in the old year. What matters is when the service or good was received, not the invoice date or the payment date. You recognise the amount as costs still to be paid.
Does matching also apply to the tax return?
Broadly yes: for tax too, profit is allocated, in line with sound business practice, to the year to which it relates.
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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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