May my annual accounts be in dollars instead of euros?
Yes, if the activities or international group structure justify it. A dollar bank account alone does not make that choice appropriate.
The short answer
Yes, if the activities or international group structure justify it. A dollar bank account alone does not make that choice appropriate.
Basis: art. 2:362(7) and 2:384(5) DCC
When do annual accounts in dollars fit?
Art. 2:362(7) DCC allows a foreign currency when the activities of the legal entity or the international branching of the group justify it. Dollars may therefore be possible. The choice requires substantive support. It does not follow automatically from a shareholder's preference or the default setting of software.
Look at the currency in which the company functions economically. Think of sales prices, purchasing, financing and the environment in which cash flows arise. A Dutch advisory BV with almost all costs and turnover in euros does not automatically get suitable dollar annual accounts because one customer pays in dollars. An internationally operating company may be in a different situation. Let the assessment fit the applicable reporting framework and record it. Distinguish between the currency of individual transactions and the currency in which the full annual accounts are presented. Those are two different choices in the processing.
How do you explain translation and rates?
Next work out the translation carefully. Art. 2:384(5) DCC requires disclosure of the policies for translating amounts in foreign currencies and the treatment of exchange differences, insofar as the applicable reporting rules require that explanation. Check which rates were used for which items. A reporting period cannot simply be translated at the same rate as every balance sheet amount. Keep the rate sources and calculations with the file. For a group, also have it assessed how foreign participations are treated in the single-entity and consolidated figures. A spreadsheet with a single exchange rate is often insufficient for that.
Do not confuse the commercial annual accounts with tax permission. For corporate income tax there are separate rules on filing in functional currency. The commercial choice does not automatically give permission for that. Discuss the tax consequences and any application requirements with your adviser or the Belastingdienst (the Dutch Tax Administration) before you convert the records. Also check that the reporting software supports the chosen currency in amounts, notes and digital output. Changing the currency symbol without adjusting the underlying units and translations does not produce correct annual accounts. So test the full output with known amounts.
What applies separately to the CIT return?
With a change from the previous year, the comparison must remain understandable. Document the reason, the translation used and the effect on presentation. Tell a bank or shareholder whether a development is caused by business results or by exchange movements. Also keep the reconciliation with the records, which may be kept in another currency. For a simple domestic BV, reporting in euros may practically remain the clearest. Choose dollars when the facts and rules support it, and then organise both the financial processing and the technical and tax reconciliation from the start.
Sources
Frequently asked questions
May a BV freely choose a presentation currency?
The foreign currency must fit the activities or the international group structure.
Which policies belong to translation?
Record the rates used and the treatment of exchange differences.
Does tax permission apply automatically?
No. Separate tax conditions exist for filing a return in functional currency.
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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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