RJ 221 Projects in progress and percentage of completion
RJ 221 is about projects that you carry out for a customer over more than one period, such as construction, installation and custom software. If the result can be estimated reliably, you recognise revenue and costs by progress (percentage of completion). An expected loss you recognise immediately. Under the RJk a small entity may also take profit on completion.
The short answer
RJ 221 is about projects that you carry out for a customer over more than one period, such as construction, installation and custom software. If the result can be estimated reliably, you recognise revenue and costs by progress (percentage of completion). An expected loss you recognise immediately. Under the RJk a small entity may also take profit on completion.
Updated 30 October 2026
Key facts
| Legal basis | art. 2:384(2) DCC (realised profit only), art. 2:388(2) DCC, art. 7(2) Decree on annual accounts formats (Besluit modellen jaarrekening) (separate balance sheet item) |
| Guideline | RJ 221 (amended 2024) applies since financial year 2025 to medium-sized and large entities; the RJk counterpart is section B5.3 |
| Balance sheet item | Per project: recognised revenue minus recognised losses minus billed instalments; a debit balance between inventories and receivables, a credit balance under current liabilities (RJ 221.409) |
| Tax | Profit by progress is mandatory for tax (art. 3.29b Dutch Income Tax Act 2001 (Wet IB 2001), for the BV via art. 8 Dutch Corporate Income Tax Act 1969 (Wet Vpb 1969)) |
What falls under RJ 221
This is work that a customer commissions from you: you build or make something for the customer, and the work usually runs across the year-end. Think of a bridge, a factory hall, a custom machine or a software platform for a single customer. The work of the architect or project manager on such a build, demolition with restoration of the site, and the development of something with no alternative use for yourself also fall under it (RJ 221.106). The rules for revenue and costs also generally apply to services in general (RJ 221.102).
Property development, where you develop homes or offices yourself, falls under this chapter for the units sold unconditionally before or during construction; the unsold units are inventory (RJ 221.319 to 321). The work in progress from art. 2:369 DCC is something else: that is semi-finished product in your own production, with profit only on sale (RJ 221.103; see RJ 220).
Taking profit before completion fits within the law, because the work performed counts as realised:
In applying the principles, prudence is exercised. Profits are recognised only to the extent that they have been realised at the balance sheet date.
Version per financial year
For financial years 2025, 2026 and 2027 the same text applies: RJ 221 (amended 2024). From financial year 2025 that version asked for more in the notes: the nature of the significant performance obligations and the methods per type of performance obligation. A medium-sized entity that condenses its profit and loss account to gross operating result need not state the project revenue of the year, unless projects are a significant revenue category (RJ 221.414; RJ-Uiting 2024-13).
For micro and small, projects are in RJk B5.3. The version from financial year 2026 (B5, amended 2025) changed only wording there; the choice between progress and completion exists in all three years.
Revenue and costs of a project
- Revenue. The contract price plus variations, claims and incentive payments (RJ 221.201). A bonus, penalty or discount you estimate prudently (RJ 221.202a); a claim counts only if the customer is likely to accept it and the amount is reliable (RJ 221.204). If there is more than a year between performance and payment, an interest adjustment may be needed (RJ 221.202b).
- Additional work that is a separate performance at a price reflecting its value is a new contract. If the price is not appropriate, you allocate the new total price across the work in progress and the additional work; additional work that is not a separate performance changes the current revenue and progress (RJ 221.205).
- Costs. Direct costs, including expected warranty costs, a systematically allocated part of project overheads and costs you charge on contractually (RJ 221.206 to 211); no selling costs or general administrative costs (RJ 221.213).
When profit by progress, and how you measure progress
With a fixed price, the result can be estimated reliably if four things hold: the total revenue is fixed, the customer is likely to pay, the costs to completion and the stage of completion can be determined reliably, and the project costs are delimited so that you can compare them with the budget (RJ 221.302). With a cost-plus contract, payment and reliable costs are enough (RJ 221.303). If the conditions are met, you recognise revenue and costs by progress; in the RJ that is a firm statement (RJ 221.301).
You measure progress with the method that best follows the work: costs incurred divided by total expected costs, a survey of work performed, or completed components (RJ 221.309). Billed instalments say little about progress (RJ 221.311). If you calculate with costs, leave material not yet used and prepayments to subcontractors out of the numerator (RJ 221.313).
If the result is (not yet) reliable, for instance in the early phase, you recognise revenue up to the amount of the costs you are likely to recover, without profit (RJ 221.314 and 315). With a flow of mainly short projects this is also allowed if equity and result do not shift materially as a result (RJ 221.316). An expected loss you always recognise at once, for the whole project (RJ 221.323 and 324).
The projects in progress item on the balance sheet
Per project you calculate: recognised revenue minus recognised losses minus billed instalments. A positive balance is an asset, a negative balance a liability to the customer (RJ 221.409). You do not offset debit and credit projects against each other. A billed instalment counts only once you or the customer have performed, for instance because the customer has already paid (RJ 221.409). Expenditure for work still to come, such as purchased but unused material, appears as inventory or prepaid expense (RJ 221.411). Project revenue is net turnover (RJ 221.401).
The notes of medium-sized and large entities include the project revenue of the year, the methods per type of performance obligation, the cumulative recognised amount of project revenue and the total of billed instalments, and retentions if you have been formally put in default (RJ 221.414 and 415).
Micro and small: choosing between progress and completion
The RJk allows a free choice between profit by progress and profit on completion, provided you treat similar projects in the same way (RJk B5.308). If you choose completion, during the term you recognise revenue equal to the costs you are likely to recover, so that the project yields nil in those years (RJk B5.313). An expected loss you recognise immediately under both methods (RJk B5.315). A separate balance sheet item is recommended; without that item, debit balances go under receivables and credit balances under current liabilities (RJk B5.322). You disclose the method and how you measure progress (RJk B5.327).
Note the combination with tax-based principles (art. 2:396(6) DCC): for tax, profit by progress is mandatory (art. 3.29b Dutch Income Tax Act 2001), so whoever prepares the annual accounts on tax-based principles cannot choose completion (RJk D3.2.202a).
Per size class
| Class | Method | What you show |
|---|---|---|
| Micro | Choice of progress or completion (RJk B5.308 via M1.301); loss immediately | Only totals of current assets and liabilities; no notes |
| Small under the RJk | Choice of progress or completion; under tax-based principles progress | Method and measurement of progress (art. 2:384(5) DCC); separate balance sheet item recommended |
| Small under the full RJ | Progress if the result is reliable (RJ 221.301) | As medium-sized, with the exemptions of art. 2:396 DCC |
| Medium-sized | Progress mandatory if the result is reliable | RJ 221.414 and 415; project revenue not with gross operating result, unless significant |
| Large | Progress mandatory if the result is reliable | RJ 221.414 and 415 in full |
Case: a software company with a profitable and a loss-making project
Codewerf Noord BV (fictitious) builds custom software. At the end of 2026 two projects are running.
- Project A: fixed price € 400.000, total budgeted costs € 320.000. Up to and including 31 December 2026 € 170.000 of costs have been incurred, of which € 10.000 for licences that will only be used in phase 2. Billed: € 240.000.
- Project B: fixed price € 100.000, expected total costs € 115.000. Costs incurred € 46.000, billed € 30.000.
Progress of A under the cost method: (€ 170.000 − € 10.000) : € 320.000 = 50%. Progress of B: € 46.000 : € 115.000 = 40%. The licences of € 10.000 appear on the balance sheet as a prepaid expense.
| 2026, profit by progress (RJ 221) | Project A | Project B |
|---|---|---|
| Revenue (progress × contract price) | € 200.000 | € 40.000 |
| Costs in the profit and loss account | − € 160.000 | − € 46.000 |
| Additional expense for the expected loss | – | − € 9.000 |
| Result 2026 | + € 40.000 | − € 15.000 |
| Balance sheet: revenue − loss − instalments | € 200.000 − € 240.000 = − € 40.000 (liability) | € 40.000 − € 9.000 − € 30.000 = € 1.000 (asset) |
Project B loses € 15.000 in total (€ 100.000 − € 115.000). After 40% progress, € 6.000 of that is already in the figures (€ 40.000 revenue − € 46.000 costs); the remaining € 9.000 is added directly in 2026. Codewerf shows € 40.000 under current liabilities and € 1.000 under projects in progress on the asset side. The result of 2026 on both projects is + € 25.000.
If Codewerf, as a small entity under the RJk, chooses profit on completion, it recognises € 160.000 of revenue on A, equal to the costs to be recovered: result nil, balance sheet balance € 160.000 − € 240.000 = − € 80.000. The loss on B remains − € 15.000, so the result for 2026 is − € 15.000; the € 40.000 of A moves to 2027. Under tax-based principles profit by progress applies to project A.
A medium-sized or large Codewerf discloses the cumulative project revenue (€ 240.000) and the billed instalments (€ 270.000). As a micro-entity Codewerf has the same choice as small, but shows only totals.
Common mistakes
- Using invoicing as the measure of progress.
- Counting purchased but not yet used material in the cost method, so that progress and profit come out too high.
- Spreading an expected loss over the remaining term instead of recognising it at once.
- Adding all projects up to a single balance, so that projects with an amount billed in advance disappear against projects with work still to be billed.
How it works at Jaarrekening.io
In the Bookkeeping of Jaarrekening.io, the Projects part calculates, for each project with a contract sum, the progress, based on a percentage that you enter or on costs incurred against the cost budget, and the revenue you recognise on that progress. The app flags an expected loss; you create and confirm the entry for it yourself. In the notes the app asks whether you carry out projects for third parties, which method you use and how you measure progress.
Sources
Frequently asked questions
Is percentage of completion mandatory under RJ 221?
For medium-sized and large entities, and small ones that follow the full RJ: yes, as soon as the result of the project can be estimated reliably (RJ 221.301). If that is not yet so, you recognise revenue up to the amount of the costs you are likely to recover. Micro and small entities under the RJk may choose between profit by progress and profit on completion (RJk B5.308), except under tax-based principles.
How do I account for a loss-making project?
As soon as it is probable that the total costs exceed the total revenue of the contract, you recognise the whole expected loss immediately as an expense, regardless of progress and regardless of profit on other projects (RJ 221.323 and 324; RJk B5.315). On the balance sheet that loss reduces the balance of the project within the projects in progress item (RJ 221.412).
Where does a project billed in advance appear on the balance sheet?
A project whose billed instalments exceed the recognised revenue (after losses) has a credit balance. That appears as a liability under current liabilities, separate from projects with a debit balance, which appear between inventories and receivables (RJ 221.409). Under the RJk a credit balance may also be included in current liabilities if you do not use a separate item (RJk B5.322).
Are billed instalments a good measure of progress?
Usually not. Payment schedules often run ahead of or behind the work (RJ 221.311). Customary measures are the ratio of costs incurred to total costs, a survey of the work performed or completed components (RJ 221.309). Under the cost method you leave out material not yet used and prepayments to subcontractors (RJ 221.313).
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