Statutory reserve (wettelijke reserve)
A reserve that the law requires to be held and that may not be distributed, for example for capitalised development costs or participating interests at net asset value (art. 2:365, 2:389 DCC).
What does statutory reserve mean?
A reserve that the law requires to be held and that may not be distributed, for example for capitalised development costs or participating interests at net asset value (art. 2:365, 2:389 DCC).
A statutory reserve is equity that is restricted under a specific statutory provision. Its size and release differ per type of reserve. It limits the distributable capital; the balance is not the same item as a provision.
How does it work?
art. 2:373(4) DCC lists which reserves are statutory. For a BV mainly three count. The reserve for capitalised costs of formation, share issue and development: as long as those costs are on the balance sheet, the BV holds a reserve of the same size (art. 2:365(2) DCC). The participating interests reserve, for results of participating interests that the BV cannot have distributed without restrictions (art. 2:389(6) DCC). And the revaluation reserve (art. 2:390 DCC).
Its function is protection against distribution. The general meeting may only distribute to the extent that equity exceeds the reserves that must be held under the law or the articles of association (art. 2:216(1) DCC). A statutory reserve does not arise from a payment but from a transfer from the free reserves or the result, and is released as the cause disappears.
Example
A software BV capitalises € 25.000 of development costs in 2026 and amortises them over five years. At the end of 2026, € 20.000 is on the balance sheet; the statutory reserve is then also € 20.000, charged to the other reserves. Equity is € 70.000: capital € 1.000, statutory reserve € 20.000, other reserves € 34.000 and result € 15.000. Room under the balance sheet test: 70.000 − 20.000 = € 50.000. At the end of 2027 the carrying amount is € 15.000 and € 5.000 of the reserve is released to the other reserves.
In the annual accounts
Equity and notes; with limited micro presentation, less detail in the publication documents.
Difference from a reserve under the articles of association
A statutory reserve follows from the law and cannot be cancelled by resolution; it only disappears when the cause disappears. A reserve under the articles of association (statutaire reserve) follows from the company's own articles and can be changed by amending them. Both count in the balance sheet test as long as they exist.
Common mistakes
- Seeing a restricted reserve as cash
- Showing a provision as a statutory reserve
What to watch for
- At each year-end, go through the three sources: capitalised development costs, participating interests at net asset value and revalued assets.
- Book the reserve within equity and not through the profit and loss account.
- Micro entities combine equity into one line (art. 2:395a(4) DCC), so the reserve is not visible in the filed balance sheet. Small and larger entities show it separately (art. 2:396(3) DCC). See what are statutory reserves.
Legal basis and source
art. 2:365, 2:389 and 2:390 DCC
Frequently asked questions
Can a statutory reserve be distributed?
No. As long as it must be held, it counts as restricted capital in the balance sheet test of art. 2:216(1) DCC. The participating interests reserve and the revaluation reserve can, however, be converted into capital.
Does every BV have a statutory reserve?
No. A BV (private limited company) without capitalised formation or development costs, without participating interests at net asset value and without revaluation has none.
Read more
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.
Get started