RJ 254 Liabilities: classification, repayments and covenants
RJ 254 governs the measurement and classification of liabilities in Dutch annual accounts. After initial recognition they are carried at amortised cost. What can be called in within twelve months is current; preferably, next year's repayment goes there too. A breached bank covenant makes the loan current, unless the bank waived its right or granted a grace period before the balance sheet date.
The short answer
RJ 254 governs the measurement and classification of liabilities in Dutch annual accounts. After initial recognition they are carried at amortised cost. What can be called in within twelve months is current; preferably, next year's repayment goes there too. A breached bank covenant makes the loan current, unless the bank waived its right or granted a grace period before the balance sheet date.
Updated 30 October 2026
Key facts
| Legal basis | art. 2:375 DCC (classification, terms, security, subordination, next year's repayment); arts. 9 and 12 Besluit modellen jaarrekening (Dutch decree on annual accounts formats) |
| Guideline | From financial year 2026 RJ 254 (amended 2025), before that the 2024 version; micro and small entities follow RJk B9 |
| Measurement | First fair value including transaction costs, then amortised cost (RJ 254.201 and 202) |
| Regulated elsewhere | Derivatives and trading portfolio (RJ 290), pensions (RJ 271), tax liabilities (RJ 272), leases (RJ 292), provisions (RJ 252) |
What a liability is and how to measure it
A liability is a fixed obligation at the balance sheet date that you normally settle in cash; if the amount is not fixed, it is a provision. An obligation subject to a condition precedent goes on the balance sheet only once the condition is likely to be met (RJ 254.108). A lease for the coming years is usually not a liability but a multi-year commitment in the notes (RJ 254.109).
On initial recognition a liability is stated at fair value, including directly attributable transaction costs, such as an arrangement fee (RJ 254.201). Afterwards you measure it at amortised cost using the effective interest method; straight-line allocation is allowed if it does not differ materially (RJ 290.523a). Without premium, discount or costs, that is simply the nominal amount (RJ 254.202). You may also capitalise the difference between the amount to be repaid and the amount received separately and amortise it (art. 2:375(5) DCC). You take a penalty for early repayment into account only once early repayment has been announced or is certain (RJ 254.203).
Current or non-current
A liability is current if the creditor can call it in within twelve months after the balance sheet date, even without an agreed term (RJ 254.303); a current account with the shareholder without a fixed term is therefore usually current too (see current account with the DGA). A liability stays non-current if at the balance sheet date you can and intend to refinance it for at least twelve months; if the refinancing is only completed before the accounts are prepared, you may show the liability as non-current with an explanation (RJ 254.304 and 305).
The amount is stated that the legal entity must repay, during the financial year following the one to which the annual accounts relate, on loans included under liabilities with a remaining term of more than one year.
The law therefore only requires a statement if you leave next year's repayment under non-current liabilities. The RJ and the RJk recommend placing that part under current liabilities, because the balance sheet then shows better what has to be paid within a year (RJ 254.308 and 406; RJk B9.206). See also where does next year's repayment go.
A breached or shaky bank covenant
Many bank loans have covenants, such as a minimum solvency ratio or a maximum debt relative to operating cash flow. What a breach does to the classification depends on when you reach an agreement with the bank:
| Situation at the balance sheet date | Classification | Paragraph |
|---|---|---|
| Covenant breached, loan immediately repayable, no agreement | Entire loan current | RJ 254.307; RJk B9.206 |
| Covenant breached, but on or before the balance sheet date the bank waived the right to call in the loan | Non-current, with next year's repayment preferably current | RJ 254.307 under a |
| Covenant breached, on or before the balance sheet date a grace period was agreed running at least until twelve months after the balance sheet date | Non-current | RJ 254.307 under b |
| Waiver or grace period only after the balance sheet date, before the accounts are prepared | Choice: non-current with explanation, or current | RJ 254.307, final part |
| Within the limits at the balance sheet date, but a breach expected within twelve months | Non-current; current is also allowed, with explanation | RJ 254.307a; RJk B9.206a |
Medium-sized and large entities explain a covenant if during the year or before preparation they no longer complied with it or came close: the main conditions, the amount of the loan and the consequences of a breach (RJ 254.408). For every size class, a breach can also be a sign of uncertainty about the going concern.
Notes on liabilities
For each group of liabilities stated in paragraph 1, the amount is indicated for which the remaining term exceeds one year, stating the interest rate on it. For the total of the liabilities stated in paragraph 1, the amount is indicated for which the remaining term exceeds five years.
- Interest. For a variable or increasing interest rate you state the agreed pattern or what the rate depends on (RJ 254.403).
- Security. For the total of the liabilities: which liabilities are covered by a mortgage or pledge, and which agreements exist on whether or not assets may be encumbered (art. 2:375(3) DCC; RJ 254.404).
- Subordination. Only a liability that is subordinated to all other liabilities is shown as subordinated, with the nature of the subordination (art. 2:375(4) DCC; RJ 254.309 and 405). A loan that ranks behind the bank only is not.
- Convertible loans. The conversion terms (art. 2:375(7) DCC); for classification as equity or liability see RJ 240 and RJ 290.
- Movement schedule. Medium-sized and large entities give, per group of non-current liabilities, including finance leases, the movement from opening to closing balance and the current portion (RJ 254.408a).
Version per financial year
| Financial year | RJ 254 | RJk B9 |
|---|---|---|
| 2025 | Amended 2024: new paragraph 307a on an expected breach within twelve months; paragraph 408 requires an explanation once covenants are breached or nearly reached, with the amount of the loan (RJ-Uiting 2024-13) | Amended 2024: the same choice in B9.206a |
| 2026 | Amended 2025: besides the grace period, paragraph 307 also names waiver of the right to call in the loan (waiver) as a ground for staying non-current (RJ-Uiting 2025-3A) | Amended 2025: the same clarification in B9.206; B9.103 deleted (RJ-Uiting 2025-3B) |
| 2027 | No new change in the 2027 edition | Unchanged compared with 2026 |
By size class
| Class | Balance sheet | Notes |
|---|---|---|
| Micro | Liabilities as one line item, with the amount up to one year and the amount longer than one year (art. 2:395a(4) DCC) | None |
| Small | Current and non-current separate; the types of art. 2:375(1) need not be shown separately | Total longer than one year and longer than five years, without the interest rate; security (art. 2:396(3) DCC). The law does not require a statement of next year's repayment; RJk B9.206 recommends the reclassification. |
| Medium-sized | All types of art. 2:375(1); in the published balance sheet the types c, d, e, h, i and j may be combined (art. 2:397(5) DCC) | Art. 2:375 in full, covenants (RJ 254.408), movement schedule (254.408a), RJ 290 paragraph 9 with the exemptions for medium-sized entities |
| Large | All types of art. 2:375(1) | Everything for medium-sized, and paragraph 9 of RJ 290 in full |
Case: a transport company falls below its solvency covenant
Koeltransport Veenhof BV (fictitious), medium-sized, has a bank loan that stood at € 1.400.000 on 1 January 2026, at a fixed 4.5% interest, with € 200.000 repaid every year on 31 December. After the 2026 repayment € 1.200.000 remains: € 200.000 falls due in 2027, € 800.000 in 2028 through 2031 and € 200.000 in 2032. The bank requires solvency of at least 25%; on 31 December 2026 it is 22%. The other current liabilities are € 800.000 and current assets € 1.300.000.
| Scenario | Bank loan non-current | Current liabilities (total) | Liquidity ratio (current ratio) |
|---|---|---|---|
| A. On 20 December 2026 the bank waived in writing its right to call in the loan | € 1.000.000 | € 1.000.000 | 1,3 |
| B. On 20 December 2026 a grace period until 31 March 2027 was agreed | – | € 2.000.000 | 0,65 |
| C. Waiver only on 15 February 2027, accounts prepared in April: Veenhof chooses non-current | € 1.000.000 | € 1.000.000 | 1,3 |
| D. No agreement | – | € 2.000.000 | 0,65 |
In scenario B there is an agreement, but it does not run until twelve months after the balance sheet date; the whole loan becomes current. In scenario C Veenhof explains that it classified the loan as non-current on the basis of the agreement after the balance sheet date. In all scenarios Veenhof, as a medium-sized entity, states the covenant (25%), the actual solvency (22%), the amount of the loan and what the bank may do in case of a breach (RJ 254.408). The movement schedule shows € 1.400.000 − € 200.000 = € 1.200.000, of which € 200.000 within one year; in scenario A, € 200.000 is longer than five years, at 4.5%.
In addition the DGA has lent the BV € 150.000, subordinated to the bank but not to the other creditors. That loan is shown as an ordinary non-current liability and not as a subordinated liability (RJ 254.309).
As a small entity under the RJk Veenhof classifies under the same rules (RJk B9.206). In the notes the total longer than one year and longer than five years, without interest rate, and the security are sufficient. As a micro-entity it shows one line item for liabilities with the split into up to and longer than one year; in scenario D everything is up to one year.
Common mistakes
- Leaving next year's repayment under non-current liabilities without stating the amount.
- Leaving a loan non-current after a covenant breach, when the bank conceded only after the balance sheet date, without explaining this.
- Treating a short grace period, shorter than twelve months after the balance sheet date, as a reason to stay non-current.
- Calling a loan 'subordinated' that is subordinated only in relation to the bank.
How it works in Jaarrekening.io
The Loans module in the Bookkeeping section of Jaarrekening.io creates a repayment schedule for each loan and, for an arrangement fee or discount, calculates with the effective interest rate. At the balance sheet date it proposes a reclassification of the repayments in the coming twelve months to current liabilities. For the notes it gives the terms up to one year, from one to five years and longer than five years, with interest and security. Whether a covenant has been breached and what the bank has promised, you record yourself.
Sources
Frequently asked questions
Must next year's repayment go under current liabilities?
The law only requires you to state the amount if it stays under non-current liabilities (art. 2:375(6) DCC). The RJ and the RJk recommend placing the part repaid within twelve months under current liabilities (RJ 254.308; RJk B9.206). For a small entity the statement under paragraph 6 is not mandatory, because art. 2:396(3) DCC does not mention it.
What happens to my loan if I miss a bank covenant?
If the loan thereby becomes immediately repayable, you classify it entirely as current, unless on or before the balance sheet date the bank waived its right to call it in, or granted a grace period running at least twelve months after the balance sheet date (RJ 254.307; RJk B9.206). If that agreement is made only after the balance sheet date but before the accounts are prepared, you may keep it non-current and explain this in the notes.
Is a current account with the DGA a non-current liability?
Usually not. Without a fixed term the DGA can demand the balance, and then the liability is current (RJ 254.303). If there is a written agreement that the balance will not be called in within twelve months, or a loan with a repayment schedule, it can be non-current. You show the liability as subordinated only if the DGA ranks behind all other creditors (RJ 254.309).
Must a small BV state the interest on its loans?
No. A small entity states the total of liabilities with a remaining term of more than one year and more than five years, without a breakdown by type and without the interest rate (art. 2:396(3) DCC). It does state the security it has provided (art. 2:375(3) DCC; RJk B9.205).
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