Prepayments and accrued income (overlopende activa)
Prepaid costs and income still to be received that are allocated to the financial year (transitory items on the assets side).
What do prepayments and accrued income mean?
Prepaid costs and income still to be received that are allocated to the financial year (transitory items on the assets side).
These assets ensure that an expense paid or income still to be received ends up in the correct financial year. The receivable usually has a short term. The item is no substitute for a customer who really has to be invoiced.
How does it work?
The law names prepayments and accrued income as the last group of current assets, insofar as they are not shown under receivables (art. 2:364(3) DCC). RJ 224 distinguishes two kinds: amounts paid in advance for costs that fall to future periods, such as insurance premiums, subscriptions and rent, and amounts still to be received for income of the past period, such as interest on a savings account.
The allocation of an amount paid in advance to the following periods is done systematically, usually by time. If prepayments and accrued income appear as a separate heading on the balance sheet, the part that is long-term is indicated (RJ 224). An expense that yields no future benefit cannot be carried forward: that is costs of the year.
Example
An accounting firm (BV) pays on 1 October 2026 € 12.000 for a twelve-month software licence and on 15 December € 3.600 office rent for January 2027. On the savings account € 450 of interest accrued over 2026, which the bank credits on 2 January. At 31 December 2026: prepaid licence 9/12 × 12.000 = € 9.000, prepaid rent € 3.600, interest still to be received € 450. Together € 13.050. The 2026 profit and loss account contains € 3.000 of licence costs and € 450 of interest income; the January rent does not appear in it.
In the annual accounts
Current assets on the balance sheet; a micro entity may omit accruals for other operating costs and states this at the foot of the balance sheet (art. 2:395a(3) DCC).
Difference from receivables
A receivable from a customer is someone to whom an invoice has been sent for a performance delivered. A prepayment or accrued income item has no invoice to a customer: it is a prepayment to a supplier or income that has been earned but not yet settled. Turnover still to be invoiced you identify separately, so that the receivables item continues to reconcile with the subledger.
Common mistakes
- Booking the full prepayment as costs
- Netting a receivable and a prepayment without distinction
What to watch for
- Prepare a small schedule per item with total amount, period and the part falling after the balance sheet date.
- Go through the large annual contracts: insurance, licences, maintenance, lease, rent.
- A micro entity does not have to include prepayments and accrued income for other operating costs and states that choice at the foot of the balance sheet (art. 2:395a(3) DCC). Small, medium-sized and large entities always include them.
Legal basis and source
art. 2:364(3) DCC; RJ 224
Frequently asked questions
Is a deposit paid a prepayment?
No. You get a deposit back and it is therefore a receivable, usually with a term of more than a year. A prepayment is not repaid but consumed.
May I simply book small prepayments as costs?
Yes, if the amount is negligible for the insight, so it influences no reader's decision (RJk A1.304a). Then do so in the same way every year, so the years remain comparable.
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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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