Preparing the Dutch Profit and Loss Account: Categorical or Functional
The profit and loss account explains the result for the financial year. Dutch law offers two layouts, and the size class determines how much detail you show and whether the statement is made public.
The short answer
The profit and loss account shows how the result for the financial year arose from income and expenses. Dutch law knows two layouts: by nature of expense (categorical, model E) and by function (functional, model F). Every BV prepares one. Micro and small entities do not have to make it public; medium-sized ones may file a simplified version.
Updated 30 October 2026
Key facts
| Legal basis | art. 2:362(3) DCC (function), art. 2:377 DCC (line items), art. 1 Besluit modellen jaarrekening (Dutch decree on annual accounts formats; models E and F; I and J for small) |
| Period | The financial year; income and expenses are allocated to the year to which they relate (art. 2:362(5) DCC) |
| Net turnover | Income from the supply of goods and services, after deduction of discounts and of taxes levied on turnover (art. 2:377(6) DCC) |
| Public | Micro and small: no. Medium-sized: simplified. Large: in full |
What Dutch law requires of the profit and loss account
The profit and loss account together with the notes gives a true, clear and consistent view of the size of the result for the financial year, and of how it is derived from the items of income and expenses (art. 2:362(3) DCC). Where the balance sheet shows a position, this statement shows a period.
Income and expenses from ordinary business activities, the taxes on them and the result after tax must be separately visible (art. 2:377(1) DCC). Items of exceptional size, or that occur to an exceptional extent, are stated by amount and nature (art. 2:377(8) DCC). Think of the book profit on a property sold or a one-off settlement payment.
The starting point is allocation, not cash. An invoice from December that is paid in January is turnover of the old year. An insurance premium paid in advance for the next year is not yet an expense.
Two layouts: by nature of expense or by function
You split income and expenses from ordinary business activities according to paragraph 3 or paragraph 4 of art. 2:377 DCC. The Besluit modellen jaarrekening works out that choice in model E and model F.
| Categorical (model E) | Functional (model F) | |
|---|---|---|
| Question it answers | What was the money spent on? | What were the costs incurred for? |
| Cost items | Raw materials and consumables and other external costs, wages, social security charges, depreciation, other operating expenses | Cost of sales, selling costs, general and administrative costs |
| Subtotals | Total operating income and total operating expenses | Gross turnover result and net turnover result |
| Fits | Ledger accounts organised by type of expense | Bookkeeping with cost centres or departments |
| Extra disclosure | None | Wages and social security charges in the notes (art. 2:382 DCC) |
The categorical model fits a ledger organised by type of expense. The functional model requires you to allocate wage and depreciation costs across purchasing or production, selling and administration. Whichever you choose: switching is only allowed for well-founded reasons and with an explanation (art. 2:363(4) DCC).
Worked example: the same BV in both models
A technical wholesaler achieves net turnover of € 800.000 in 2025. The example uses fictitious amounts.
| Categorical | € | Functional | € |
|---|---|---|---|
| Net turnover | 800.000 | Net turnover | 800.000 |
| Cost of raw materials and consumables | 480.000 | Cost of sales | 560.000 |
| Wages | 150.000 | Gross turnover result | 240.000 |
| Social security charges | 30.000 | Selling costs | 90.000 |
| Depreciation | 20.000 | General and administrative costs | 90.000 |
| Other operating expenses | 60.000 | ||
| Total operating expenses | 740.000 | Total costs | 180.000 |
| Result before interest | 60.000 | Net turnover result | 60.000 |
In the functional model, the cost of sales contains the purchases (€ 480.000), the wages of warehouse and logistics (€ 60.000) and the depreciation (€ 20.000). The remaining wage costs of € 120.000 and the other operating expenses of € 60.000 are divided equally between selling and administration. The outcome is the same in both models; only the route to it differs.
After that, both models end the same way. Interest expense of € 5.000 gives a result before tax of € 55.000. If the taxable amount equals that, corporate income tax is 19,0% × € 55.000 = € 10.450 and the result after tax is € 44.550.
If this BV is small, it may combine the top lines into a single item, gross operating result (art. 2:396(4) DCC): € 800.000 − € 480.000 = € 320.000 in the categorical model. The net turnover itself is then no longer shown.
Detail and publication per size class
| Item | Micro | Small | Medium-sized | Large |
|---|---|---|---|---|
| Requirements: two of the three, on two consecutive balance sheet dates (financial years from 1-1-2024) | assets ≤ € 450.000, net turnover ≤ € 900.000, < 10 employees | assets ≤ € 7,5 mln, net turnover ≤ € 15 mln, < 50 employees | assets ≤ € 25 mln, net turnover ≤ € 50 mln, < 250 employees | At least two limits for medium-sized exceeded |
| Preparation | Limited: net turnover, other operating income, wages, cost of raw materials and consumables, depreciation and impairments in one item, other operating expenses, taxes and result after tax (art. 2:395a(5) DCC) | Model E or F, or I or J; combining into gross operating result is allowed (art. 2:396(4) DCC) | Gross operating result is allowed, with a ratio for the development of turnover (art. 2:397(3) DCC) | Full model E or F |
| Making public | No (art. 2:395a(8) DCC) | No (art. 2:396(8) DCC) | Yes, in the simplified form (art. 2:397(5) DCC) | Yes, in full |
| Turnover by line of business and region | No | No (art. 2:396(5) DCC) | No (art. 2:397(4) DCC) | Yes (art. 2:380 DCC) |
Not making public is not the same as not preparing. The micro BV also prepares a profit and loss account, and the general meeting co-adopts it. See do I have to publish the profit and loss account and the internal profit and loss account of a micro BV.
Common mistakes
- Turnover including VAT. Net turnover excludes the taxes levied on turnover.
- Booking on the payment date. Costs and income belong in the year to which they relate.
- Dividend as a cost item. A profit distribution is not an expense; it runs through equity and does not appear in this statement.
- Private expenses as business costs. See private costs of the DGA.
- Equating the tax expense with the assessment. The expense is the tax on the result for the year, not the amount you paid in that year; see tax and commercial annual accounts.
- Netting income and costs. Costs that are recharged and the corresponding income are two items (art. 2:363(2) DCC).
- Leaving a one-off income item unstated. Without that disclosure the result looks structurally better than it is.
The profit and loss account in Jaarrekening.io
Jaarrekening.io supports the categorical and the functional model. After the trial balance is imported, each income statement account is linked to a line item and the amounts add up to the result after tax according to fixed calculation rules. For micro and small, the statement stays out of the publication version.
Sources
- Art. 2:377 DCC: line items, two layouts and the concept of net turnover (wetten.overheid.nl)
- Art. 2:362 DCC: function of the profit and loss account and allocation (wetten.overheid.nl)
- Art. 2:363 DCC: no netting and consistent layout (wetten.overheid.nl)
- Art. 2:361 DCC: operating account for cooperatives, foundations and associations (wetten.overheid.nl)
- Art. 2:395a DCC: limited profit and loss account of the micro entity (wetten.overheid.nl)
- RJk M1.205: line items in the profit and loss account of the micro entity (Dutch Accounting Standards for micro and small entities, rjnet.nl)
- Art. 2:396 DCC: gross operating result and publication for small (wetten.overheid.nl)
- Art. 2:397 DCC: simplification for medium-sized (wetten.overheid.nl)
- Besluit modellen jaarrekening: models A to J for balance sheet and profit and loss account (wetten.overheid.nl)
- Belastingdienst (Dutch Tax Administration): corporate income tax rates
Frequently asked questions
Is a profit and loss account the same as an income statement?
In everyday speech, yes. Dutch law uses the term winst- en verliesrekening (profit and loss account). Cooperatives, and foundations or associations that fall under Title 9, replace it with an operating account if that serves the view given (art. 2:361(2) DCC).
May I switch from the categorical to the functional model?
Only for well-founded reasons. In the notes you explain how the layout differs from that of the previous year and why (art. 2:363(4) DCC). Also adjust the comparative figures so that both years are comparable.
Why does the result differ from the taxable profit?
Because the corporate income tax return has its own rules for depreciation, deduction limits and exemptions. The commercial result is the starting point; the taxable profit is a separate calculation.
Where do I see the dividend?
Not in the profit and loss account. Dividend is a distribution out of equity and is visible as a decrease in the reserves.
Must a micro BV show more internally than the law requires?
It does not have to, but it may. For micro entities the law names a limited number of items (art. 2:395a(5) DCC). For the board, shareholders and lenders, a further breakdown is often more useful.
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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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