Equity in the annual accounts

The short answer

Equity is the balance of assets minus provisions and liabilities. In the annual accounts of a BV or NV (public limited company), you split it into issued capital, share premium, revaluation reserves, other statutory reserves, reserves under the articles of association, other reserves and undistributed profit (art. 2:373(1) DCC). Statutory reserves and reserves under the articles are not distributable.

Updated 30 October 2026

Key facts

Equity in the law and in RJ 240

Article 2:373(1) DCC names seven items that are shown separately under equity: issued capital, share premium, revaluation reserves, other statutory reserves according to their nature, reserves under the articles, other reserves and undistributed profits. Repurchased own shares are not capitalised as an asset (art. 2:385(5) DCC); the acquisition price, including transaction costs, is deducted from the other reserves, or from another reserve if the articles allow it (RJk B8.107).

Statutory reserves are reserves that the law makes mandatory (art. 2:373(4) DCC). For most BVs there are four cases:

• capitalised costs of incorporation, share issue and development (art. 2:365(2) DCC);
• retained profits of participating interests at net asset value, to the extent that you cannot bring about the distribution without restrictions (art. 2:389(6) DCC);
• translation differences on foreign participating interests (art. 2:389(8) DCC);
• revaluations of assets above cost (art. 2:390(1) DCC).

RJ 240 elaborates this. Two rules from it are often missed. You determine each statutory reserve separately, without netting. And if there is too little free reserve to form it, the shortfall is charged to the other reserves, which can become negative as a result.

Processing result, dividend, share premium and loss

• Result. You prepare the balance sheet before or after appropriation of result and state at the top which of the two (art. 2:362(2) DCC).
• Dividend. The general meeting of a BV distributes only to the extent that equity exceeds the statutory and articles-based reserves. The resolution takes effect only after approval by the board, which tests whether the BV can continue to pay its due debts (art. 2:216(1) and (2) DCC).
• Share premium. What shareholders pay in above the nominal value is share premium (agio). An informal capital contribution, such as a loan that the shareholder waives, you also process as share premium under RJ 240.
• Loss. A loss is deducted from undistributed profits or the other reserves. If equity becomes negative, you assess whether there is significant doubt about continuity and set that out in the notes (art. 2:384(3) DCC); see negative equity.
• Equity or debt. In the company-only annual accounts you classify a financial instrument by legal form or by economic reality; in the consolidated annual accounts, economic reality decides (RJ 240).

Worked example: the statement of changes of a small BV

A BV starts 2025 with equity of € 200.000. In 2025 the general meeting adds the profit for 2024 (€ 30.000) to the other reserves and distributes € 20.000 in dividend. The BV capitalises € 25.000 of development costs for the first time and makes a profit of € 42.000.

The journal entries: on the dividend resolution Other reserves € 20.000 to Dividend payable € 20.000, of which the BV withholds 15% dividend tax; on capitalisation Other reserves € 25.000 to Statutory reserve € 25.000. For a next distribution at most € 222.000 − € 25.000 = € 197.000 is available, and only if the distribution test also passes.

Equity per size class

The limits below apply to financial years beginning on or after 1 January 2024. The size class follows from at least two of the three criteria on two consecutive balance sheet dates; for the first and second financial year the exception of art. 2:398(1) DCC applies. What differs is how much you break down and explain; every class keeps the statutory reserves.

Tax and commercial equity

Tax equity usually differs from commercial equity. The tax authority limits depreciation and has its own reserves, such as the reinvestment reserve and the equalisation reserve (art. 3.53 Income Tax Act 2001 (Wet IB 2001)), which are not a separate equity item commercially. The difference returns as deferred tax, not as a reserve. If a micro or small legal entity prepares the annual accounts on tax-based policies, the two equities coincide; see accounting policies.

Common mistakes with equity

• Not forming a statutory reserve for capitalised development costs, or for participating interests at net asset value whose retained profit you cannot have distributed without restriction (art. 2:389(6) DCC; RJk B3.120).
• Recognising dividend as a liability when the resolution falls after the balance sheet date; see dividend after the balance sheet date.
• Presenting a credit balance on current account with the shareholder as equity. It is a liability, even if subordinated (art. 2:375(4) DCC).
• Distributing on the balance sheet test alone, without a documented distribution test.

The statement of changes in Jaarrekening.io

In Jaarrekening.io you fill in the statement of changes per equity item: opening balance, result, distributions, contributions, revaluations, transfers and closing balance. You enter each change yourself; an unexplained difference is not booked away as another change. The statement follows the capital model of the BV and the NV. Whether a distribution is justified remains the board's judgement.

Sources

• Art. 2:373 DCC: classification of equity and statutory reserves (wetten.overheid.nl)
• Art. 2:378 DCC: movements in equity
• Art. 2:216 DCC: distributions by the BV
• Art. 2:389 DCC: statutory reserve for participating interests
• Art. 2:396 DCC: what a small legal entity shows of equity
• RJ-Uiting 2025-5: draft Guideline 240 Equity, final since 18 June 2025 (rjnet.nl)
• RJ-Uiting 2023-4: equity or debt, final since 17 May 2023
• Decree on tax valuation principles (Besluit fiscale waarderingsgrondslagen), art. 2
• KVK: the private limited company (besloten vennootschap), dividend tax

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