IT and software company annual accounts: development costs and subscriptions
Capitalised development costs with a statutory reserve, subscriptions invoiced in advance and custom work for customers: the three topics that determine a software company's figures.
The short answer
In a software company two choices determine the annual accounts. If you capitalise development costs, you maintain a statutory reserve of the same amount (art. 2:365(2) DCC); medium-sized and large entities also explain the item. You account for subscription revenue over the period in which you deliver the service; the part invoiced in advance is a liability. Custom software for one customer falls under RJ 221.
Updated 30 October 2026
Key facts
| Development costs | Intangible fixed asset (art. 2:365(1) DCC, under b); only medium-sized and large entities show the item separately |
| Statutory reserve | Equal to the capitalised amount (art. 2:365(2) DCC) |
| Depreciation | Over the expected useful life; at most ten years if it cannot be estimated reliably (art. 2:386(3) DCC) |
| Subscriptions (SaaS) | Straight-line over the contract period (RJ 270.120) |
| Custom software on commission | Project in progress (RJ 221.106) |
Development costs: capitalise or expense
The hours of your developers are payroll costs, unless they deliver a product that you are going to sell or use for years. In that case the development costs can be placed on the balance sheet as an intangible fixed asset (art. 2:365(1) DCC, under b). The Guidelines (chapter 210) set conditions for this, such as technical feasibility, expected revenue and reliable cost recording per project; the details are at capitalising development costs. Research, maintenance and fixing errors are not capitalised.
You depreciate the capitalised amount over the expected useful life. Only in the exceptional case that you cannot estimate it reliably does a maximum of ten years apply (art. 2:386(3) DCC).
The statutory reserve and what it means for dividends
Anyone who capitalises development costs must maintain a reserve equal to the capitalised amount and explain the item (art. 2:365(2) DCC). That explanation is not prescribed for micro and small entities (art. 2:395a(4) DCC, art. 2:396(3) DCC); the reserve is. This is a statutory reserve: you form it at the expense of the other reserves or the profit, and it falls along with the depreciation.
You notice the consequence at a distribution. The general meeting of a BV may only distribute to the extent that equity exceeds the reserves that the law or the articles prescribe (art. 2:216(1) DCC). A software company with € 300.000 of equity, of which € 250.000 is statutory reserve for development costs, can therefore distribute at most € 50.000, and even that only if the board approves the distribution.
Subscriptions, licences and custom work
| What you sell | When turnover | Guideline |
|---|---|---|
| Access to your platform per month or year (SaaS) | Straight-line over the period in which the customer has access | RJ 270.120 |
| Licence on software as it exists on delivery, without an obligation to maintain | On delivery, as the sale of a good | RJ 270.125, under a |
| Licence with ongoing updates and management | Over the term, as a service | RJ 270.125, under b |
| Implementation or set-up, separately identifiable | In proportion to the work performed | RJ 270.109 and 270.115 |
| Custom software that you build for one customer | In proportion to the progress of the project | RJ 221 |
An annual invoice that you send in advance is therefore not turnover for the part after the balance sheet date. That part stands under accruals and deferred income. If you bundle licence, implementation and support in one price, you split it over the separate components (RJ 270.109).
Worked example: annual subscription and a new module
A software BV invoices € 24.000 on 1 October for twelve months of access. In the same year it incurs € 120.000 in payroll costs for developers, of which € 80.000 demonstrably for a new module that meets the conditions for capitalisation. The module goes into use on 1 July and has an expected useful life of four years.
- Subscription: 3/12 × € 24.000 = € 6.000 turnover; € 18.000 stands on 31 December as an amount received in advance.
- Development: € 80.000 on the balance sheet, € 40.000 remains payroll costs of the year.
- Depreciation: € 80.000 / 4 = € 20.000 per year, in the first year 6/12 × € 20.000 = € 10.000.
- Carrying amount on 31 December: € 80.000 − € 10.000 = € 70.000.
- Statutory reserve on 31 December: € 70.000, formed from the other reserves.
Because of the capitalisation, the result before tax this year is € 70.000 higher than if all hours had been expensed, but that amount is not distributable as long as the reserve exists.
Common mistakes at software companies
- Capitalising all programming hours without time recording per project.
- Forgetting the statutory reserve, so that the free reserves look too high.
- Booking an annual subscription invoiced in advance entirely as turnover of the invoice year.
Size class and audit requirement are the same for a software company as for any other BV: the size criteria give the limits, the audit requirement check the outcome.
What BVs in this sector file
Software companies and IT service providers (SBI 62 and 63) fall under SBI section J, information and communication. That section also includes publishing, film, broadcasting and telecom (SBI 58–61).
| 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) | 10.410 | −15,9% – 47,2% – 82,3% | 0,76 – 1,80 – 5,18 |
| Small (balance sheet above € 450.000 up to and including € 7,5 million) | 4.891 | 18,9% – 50,1% – 78,2% | 1,04 – 1,79 – 4,21 |
| Medium-sized (balance sheet above € 7,5 million up to and including € 25 million) | 341 | 16,7% – 42,3% – 76,6% | 0,97 – 1,51 – 3,43 |
| Large (balance sheet above € 25 million) | 96 | 19,5% – 66,9% – 93,8% | 0,98 – 1,96 – 4,25 |
In the small balance sheet class, section J had a median solvency of 50,1% for financial year 2024, lower than the 73,4% of all balance sheets in that class together; the median current ratio was 1,79, 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.
A software BV in Jaarrekening.io
In Jaarrekening.io you read in the trial balance of your software BV (XAF audit file, Excel or CSV) and get a balance sheet, profit and loss account and, where your size class requires it, an editable draft of the notes. Whether development costs meet the conditions and how long you depreciate is decided by the board; the AI proposes the mapping of accounts and the amounts follow from fixed calculation rules.
Sources
Frequently asked questions
Can a software company with capitalised development costs pay dividends?
Only out of the equity above the statutory and articles-based reserves. The reserve for capitalised development costs is a statutory reserve and therefore does not count as distributable room (art. 2:216(1) and art. 2:365(2) DCC).
How long do I depreciate capitalised development costs?
Over the expected useful life. The ten-year limit applies only in the exceptional case that the useful life cannot be estimated reliably (art. 2:386(3) DCC). You state the depreciation method in the notes (art. 2:386(2) DCC), except as a micro entity.
When does software development for a customer fall under RJ 221?
If you build custom software on commission and the execution normally spans more than one reporting period. RJ 221 gives custom software as an example of a project in progress. You then account for the revenue in proportion to progress, and an expected loss immediately.
Do capitalised development costs count towards the size class?
Yes. The criterion is the value of the assets according to the balance sheet, and a capitalised amount is part of that. Capitalisation can therefore move a BV from micro to small if a second criterion is also exceeded, on two consecutive balance sheet dates.
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