Retail annual accounts: inventory and write-downs
In a shop the inventory determines the profit. This is how you choose a cost method, write down old collections and account for gift cards, returns and shrinkage.
The short answer
In the annual accounts of a shop the inventory determines the result. You value items at cost and write down as soon as the current value on the balance sheet date is lower (art. 2:387(2) DCC). For similar items you may use weighted average prices, fifo or lifo (art. 2:385(2) DCC). A gift card that has been sold is a liability until the customer redeems it.
Updated 30 October 2026
Key facts
| Valuation of inventory | Acquisition cost: purchase price plus incidental costs (art. 2:388(1) DCC) |
| Permitted cost formulas | Weighted average prices, fifo, lifo or a similar rule (art. 2:385(2) DCC) |
| Writing down | Mandatory if the current value on the balance sheet date is lower (art. 2:387(2) DCC) |
| Reversing a write-down | As soon as the impairment no longer exists (art. 2:387(4) DCC) |
The cost price: weighted average, fifo or lifo
A shop buys the same item at varying prices. For the units still on the shelf on 31 December, the law lets you choose: weighted average prices, fifo (what came in first is sold first), lifo or a similar rule (art. 2:385(2) DCC). The choice changes the profit, as this example shows: 100 units bought for € 20 in March, 100 units for € 26 in September, and 120 units sold.
| Method | Closing inventory of 80 units | Cost of sales |
|---|---|---|
| Fifo | 80 × € 26 = € 2.080 | € 4.600 − € 2.080 = € 2.520 |
| Weighted average | 80 × € 23 = € 1.840 | € 4.600 − € 1.840 = € 2.760 |
| Lifo | 80 × € 20 = € 1.600 | € 4.600 − € 1.600 = € 3.000 |
With rising purchase prices, fifo therefore gives the highest inventory and the highest profit. Once chosen, you keep the method: switching is allowed only for well-founded reasons (art. 2:384(6) DCC). Further explanation is at valuing inventories.
Writing down to the lower net realisable value
For slow-moving sizes, colours or collections you write down: current assets are carried at current value on the balance sheet if that is lower than the acquisition cost on the balance sheet date (art. 2:387(2) DCC). For inventory that is the net realisable value: the price at which you can still sell the item, less the costs you still incur to do so (art. 5 Current Value Decree (Besluit actuele waarde)).
The draft guideline RJ 220 names as grounds that items are damaged, obsolete or unsaleable or that selling prices have fallen. You assess item by item; you may group comparable items. If a written-down batch is still in the shop on the next balance sheet date and its value has recovered, you reverse the write-down (art. 2:387(4) DCC).
Worked example: winter coats after the collection change
A clothing shop BV has 300 winter coats in stock on 31 December at a cost of € 70 each, € 21.000 in total. Of the collection being phased out, 80 are left; in the sale they are expected to bring in € 50 each, after selling costs.
- Current coats: 220 × € 70 = € 15.400.
- Phased-out coats: 80 × € 50 = € 4.000 instead of 80 × € 70 = € 5.600.
- Write-down: € 5.600 − € 4.000 = € 1.600, charged to this financial year's result.
- Inventory on the balance sheet: € 15.400 + € 4.000 = € 19.400.
The gross margin falls by € 1.600 this year. If the shop sells the 80 coats in January for € 50, the margin on that sale is nil: the loss was taken in the year in which the decline in value arose.
Gift cards, returns, cash and shrinkage
A gift card is not turnover when sold: the amount stands as a liability on the balance sheet until the card is redeemed. If you expect returns in January, you recognise a refund liability for that part, just like a webshop (RJ 270, paragraph 112).
The difference between stock according to the books and counted stock is shrinkage: theft, breakage and counting errors. The counted quantity prevails and the difference is an expense of the financial year.
Many shops are a sole proprietorship or vof; these do not file annual accounts with the KVK. For a shop BV the ordinary size criteria apply, and with the audit requirement check you can see whether an audit by an accountant is needed.
Common mistakes in shop bookkeeping
- Valuing stock at the selling price on the shelf instead of at cost.
- Postponing the write-down of an old collection until the year of the sale.
- Switching cost methods without well-founded reasons.
What BVs in this sector file
Shops (SBI 47), including online shops, share SBI section G with wholesale (SBI 46) and the motor trade (SBI 45). The dataset does not give a figure for retail alone.
| Balance sheet class, financial year 2024 | Filings | Solvency: p25 – median – p75 | Current ratio: p25 – median – p75 |
|---|---|---|---|
| Micro (balance sheet up to and including € 450.000) | 18.381 | −27,6% – 34,3% – 75,9% | 0,71 – 1,57 – 4,08 |
| Small (balance sheet above € 450.000 up to and including € 7,5 million) | 20.564 | 27,5% – 53,9% – 76,7% | 1,31 – 2,18 – 4,55 |
| Medium-sized (balance sheet above € 7,5 million up to and including € 25 million) | 1.514 | 26,2% – 49,1% – 75,5% | 1,23 – 1,84 – 3,51 |
| Large (balance sheet above € 25 million) | 321 | 18,7% – 53,4% – 86,9% | 0,96 – 1,42 – 3,56 |
In the small balance sheet class, section G had a median solvency of 53,9% for financial year 2024, lower than the 73,4% of all balance sheets in that class together; the median current ratio was 2,18, lower than nationally (3,28). The national figure is high because of the many holding companies.
The balance sheet class follows only the balance sheet total, not the statutory size class. The dataset does not state a legal form; it covers all filings in XBRL with this SBI section, mostly from BVs. Source: KVK Business Register Open Dataset of annual accounts, processed by Jaarrekening.io, CC BY 4.0. Data downloaded and processed on 2 November 2026. Explanation and all sectors: solvency by sector and current ratio by sector.
The shop BV in Jaarrekening.io
You read in the trial balance of your shop BV as an XAF audit file, Excel or CSV file; Jaarrekening.io proposes which annual accounts line items your accounts belong to and produces a publication version that fits the size class. You determine the count, the cost method and the write-down yourself before you read in the figures. The software sends nothing to the KVK or the Belastingdienst.
Sources
- Dutch Civil Code, Book 2, Title 9
- Current Value Decree (Besluit actuele waarde) (art. 5, 5a, 7 and 11)
- RJ-Uiting 2017-4: draft guideline 220 Inventories (draft)
- RJ 270 Revenue (RJ-Uiting 2020-15, appendix 2, final)
- KVK: file annual accounts or not?
- Dutch Civil Code Book 3, art. 3:15i: record-keeping obligation
Frequently asked questions
Is lifo permitted in Dutch annual accounts?
Yes. Art. 2:385(2) DCC names lifo expressly, alongside weighted average prices and fifo. With rising prices lifo gives the lowest inventory value and the lowest profit. Apply the chosen method in the same way every year.
May I switch from fifo to weighted average prices?
Only for well-founded reasons; a lower profit in a good year is not one. You set out the reason in the notes and show with adjusted figures what the change means for equity and result (art. 2:384(6) DCC). A micro entity, which prepares no notes, is exempt from that explanation (art. 2:395a(6) DCC).
Do I have to reverse a write-down if the items later sell well after all?
Not if they have been sold: the higher revenue then falls automatically in the margin of the year of sale. If the batch is still in stock on the next balance sheet date and the impairment no longer exists, you reverse the write-down (art. 2:387(4) DCC).
Does a shop with a sole proprietorship also have to count its inventory?
Yes. A sole proprietorship also prepares a balance sheet every year (art. 3:15i DCC), and inventory is an item on it. Without a count you cannot substantiate the cost of sales, and so the profit.
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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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