Residual value (restwaarde)
Residual value is the estimated value of an asset at the end of its useful life. It reduces the amount that is depreciated.
What does residual value (restwaarde) mean?
Residual value is the estimated value of an asset at the end of its useful life. It reduces the amount that is depreciated.
The estimate must fit the expected sale or remaining use. A high residual value lowers the annual depreciation, but is not a way to raise the result without basis.
How does it work?
Residual value is what an asset is still expected to yield at the end of its useful life, after deducting the costs of sale or demolition. It determines the amount you depreciate: acquisition cost minus residual value. The law does not use the word; art. 2:386(4) DCC requires a depreciation system that is aligned with the expected future useful life. The detail is in RJ 212 and, for micro and small entities, in chapter B2 of the RJk volume.
An estimate can change. If the price of used vans rises or a machine proves worn out sooner, you adjust the residual value or useful life and spread the remaining book value over the remaining years. That is a change in estimate: it works prospectively and not retroactively (RJk volume, chapter A3).
Example
A BV buys a machine for € 50,000 on 1 January and expects to use it for five years and then sell it for € 5,000. Depreciable amount: 50,000 − 5,000 = € 45,000; per year 45,000 / 5 = € 9,000. After three years the book value is 50,000 − 27,000 = € 23,000. Then it turns out the machine will still yield € 9,000 in two years. New depreciation: (23,000 − 9,000) / 2 = € 7,000 per year for years four and five. The first three years stay at € 9,000.
In the annual accounts
Part of the valuation policy for fixed assets and P&L costs.
Difference from book value
Book value is the amount at which the asset now stands on the balance sheet; residual value is the expected proceeds at the end. In the example the book value after three years is € 23,000 and the residual value € 9,000. Only on the last day of the useful life do the two coincide.
Common mistakes
- Always assuming a residual value of zero
- Choosing an unrealistic selling price
What to watch for
- Support the residual value with something verifiable: a trade-in value from the contract, a valuation or prices of comparable used assets.
- Set it to zero if the asset is used up or yields only demolition costs.
- Review the estimate at every year-end closing and state the depreciation method in the notes (art. 2:386(2) DCC); a micro entity has no such disclosure obligation (art. 2:395a(6) DCC).
- You can calculate it with the depreciation calculator.
Legal basis and sources
art. 2:386 DCC
Frequently asked questions
Can the residual value be zero?
Yes, if you expect no proceeds at the end of the useful life. For cars and common machines zero is rarely realistic; you then depreciate too fast.
Does residual value also play a role for tax?
Yes. According to the Dutch Tax Administration (Belastingdienst), with arbitrary depreciation the book value may not fall below the residual value, and for corporate income tax a business premises is not depreciated below its WOZ value (the Dutch property tax valuation), which acts as the floor value.
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