Acquisition cost (verkrijgingsprijs)
Acquisition cost is the purchase price plus directly attributable costs of acquiring an asset and making it ready for use.
What does acquisition cost (verkrijgingsprijs) mean?
Acquisition cost is the purchase price plus directly attributable costs of acquiring an asset and making it ready for use.
VAT that can be reclaimed does not normally belong in the acquisition cost. Financing costs or later maintenance costs require a separate assessment.
How does it work?
art. 2:388(1) DCC is brief: the acquisition cost comprises the purchase price and the incidental costs. Incidental is what is needed to get the asset to its place and in working order, such as import duties, freight, installation and, for a building, notary costs and transfer tax. Discounts are deducted. VAT counts only insofar as the company cannot deduct it.
Besides current value, acquisition cost is one of the two bases the law allows (art. 2:384(1) DCC) and the starting point of every later valuation: depreciation (art. 2:386 DCC), write-down of current assets to a lower current value (art. 2:387(2) DCC) and lasting impairment of fixed assets (paragraph 3). For similar inventories the price may be determined using weighted averages or FIFO (art. 2:385(2) DCC).
Example
A BV buys a machine in Germany. List price € 20,000, discount on the invoice 2% (€ 400), transport € 1,000, installation and test run € 2,000. Training of the staff costs € 1,500 and the maintenance contract for the first year € 800. Acquisition cost: 20,000 − 400 + 1,000 + 2,000 = € 22,600. Training and maintenance do not bring the machine into a ready-for-use state and are costs of the year. The VAT is fully deductible and does not count.
In the annual accounts
Starting value of assets on the balance sheet; afterwards depreciation or impairment.
Difference from current value
Acquisition cost looks back: what was paid at the time? Current value looks at now. The law allows both, but whoever values above the acquisition cost records the difference in a revaluation reserve (art. 2:390(1) DCC). The size criteria always use assets on the basis of acquisition and production cost (art. 2:396(1) DCC).
Common mistakes
- Capitalising deductible VAT
- Adding daily maintenance to the purchase value
What to watch for
- Keep the invoice and the evidence of incidental costs with each asset; the asset register must be traceable down to the receipt.
- Interest during construction may be capitalised only for own production, not for an ordinary purchase (art. 2:388(2) DCC).
- State the policy per item (art. 2:384(5) DCC); see accounting policies.
Legal basis and sources
art. 2:388 DCC
Frequently asked questions
Does VAT count towards the acquisition cost?
Only the VAT the company cannot deduct. Deductible VAT is a receivable from the Dutch Tax Administration (Belastingdienst) and not part of the cost price.
May later expenditure be added to the acquisition cost?
A replacement of a major component is capitalised and depreciated over its own useful life. Ordinary maintenance that keeps the asset in working order is a cost of the year.
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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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