Article 2:365 DCC: intangible fixed assets and the legal reserve
Article 2:365 of the Dutch Civil Code (DCC) lists the intangible fixed assets and ties a legal reserve to two of them, incorporation costs and development costs, which reduces the equity available for distribution.
The short answer
Article 2:365 DCC lists five types of intangible fixed assets: incorporation and issue costs, development costs, purchased concessions, permits and intellectual property, purchased goodwill and prepayments. If you capitalise incorporation or development costs, you explain them in the notes and maintain a legal reserve of the same amount. That part of equity may not be distributed.
Updated 30 October 2026
Key facts
| Location | Division 3, § 2 (Assets) |
| Current text since | 1 November 2015 (Stb. 2015, 349) |
| Financial years | For financial year 2025, RJ 210 as amended in 2023 applies, from 2026 the 2025 version; the law itself has not changed in those years |
| Further rules | RJ 210 (medium-sized and large), RJk B1 (micro and small); reserve: RJ 240.227–240.231, RJk B8.113–B8.116 |
| Depreciation | Incorporation and issue costs within five years at most; development and goodwill according to useful life; only if that cannot be estimated reliably within ten years at most, and for goodwill with the reason in the notes (art. 2:386(3) DCC) |
Paragraph 1: five types of intangible fixed assets
1. The following are recognised separately under intangible fixed assets:
a. costs relating to incorporation and to the issue of shares;
b. costs of development;
c. costs of acquisition in respect of concessions, permits and intellectual property rights;
d. costs of goodwill acquired from third parties;
e. prepayments on intangible fixed assets.
What this means
- a. Incorporation and issue. Notary, advisory and registration costs on incorporation or an issue of shares. The law permits capitalising them, but the RJ advises against it because these costs yield no future benefit (RJ 210.103). If you do not capitalise them, issue costs, net of tax, are deducted directly from the share premium (RJ 240.214).
- b. Development. Expenditure in the phase in which you technically work out a new product, process or your own software. Research is always charged to the result (RJ 210.221).
- c. Concessions, permits and intellectual property. Only what you acquired from someone else: a purchased licence, a purchased trademark, an acquired patent. A self-built brand or customer base is not capitalised (RJk B1.104).
- d. Goodwill. Only if you paid for it in an acquisition. Self-generated goodwill never appears on the balance sheet.
- e. Prepayments. A down payment to a supplier on software under development, for example.
Paragraph 2: explain and maintain a reserve
2. To the extent that the legal entity capitalises the costs referred to in parts a and b of paragraph 1, it must explain them and must maintain a reserve of the same amount.
What this means
Capitalised incorporation and development costs are uncertain assets: they often have no sale value. The law protects creditors by locking up an equal part of equity. That reserve is a legal reserve (art. 2:373(4) DCC) and does not count towards the room for dividends (art. 2:216(1) DCC). The reserve does not apply to purchased licences, goodwill and prepayments.
The reserve follows the carrying amount: if you amortise, an equal part is released to the other reserves (RJ 210.103). You form it at the expense of the other reserves, the share premium or through the appropriation of profit (RJ 240.231). If the free reserves are too small, the other reserves item becomes negative; the legal reserve always stands at the full amount (RJ 240.230; RJk B8.114). In consolidated accounts the reserve is not required (art. 2:410(1) DCC); under IFRS it remains mandatory (art. 2:362(9) DCC).
Development costs: must or may capitalise
The law leaves capitalising free. The guidelines do not entirely. For medium-sized and large entities, RJ 210.224 states categorically that development costs "shall be capitalised" once all six criteria are demonstrated: technical feasibility, the intention to complete, the ability to use or sell, probable economic benefit, sufficient resources and reliable cost recording. For micro and small entities, RJk B1.105 says they "may be capitalised": a small BV can therefore choose to charge the costs directly to the result, and then has no legal reserve either.
If you cannot separate the research phase from the development phase, you treat everything as research (RJ 210.220). Amortisation starts as soon as the result is ready for use; the period is the expected useful life (art. 2:386(3) DCC). Medium-sized and large entities also show how much research and development in total was charged to the result, including amortisation of previously capitalised development (RJ 210.506); for a small entity for which development is the core of the business, RJk B1.120 mentions this as something to consider.
Case: the planning module and the dividend wish
Lindeveld Software BV (fictitious, small) builds a planning module in 2025. January through March is exploration: € 40.000, booked as expenses. From April the design is fixed and the module is technically feasible; Lindeveld capitalises the hours and hired staff from April through December, € 150.000. The module is ready on 1 January 2026 and lasts five years: € 30.000 amortisation per year.
At the start of 2025, equity consists of € 1.000 issued capital and € 90.000 other reserves. The profit for 2025 is € 25.000. In June 2026 the shareholder wants € 50.000 in dividend.
| Equity | 31-12-2025 | 31-12-2026 (after € 30.000 amortisation) |
|---|---|---|
| Issued capital | € 1.000 | € 1.000 |
| Legal reserve development costs | € 150.000 | € 120.000 |
| Other reserves | − € 60.000 | − € 5.000 |
| Undistributed profit | € 25.000 | € 20.000 |
| Total | € 116.000 | € 136.000 |
Explanation of the figures: at the end of 2025, € 90.000 − € 150.000 = − € 60.000 other reserves. In 2026 the profit for 2025 goes to the other reserves (+ € 25.000), € 30.000 of the legal reserve is released (+ € 30.000) and the profit for 2026 is € 20.000. Other reserves at the end of 2026: − € 60.000 + € 25.000 + € 30.000 = − € 5.000.
The dividend wish: according to the adopted balance sheet at 31 December 2025, equity is € 116.000 and the legal reserve is € 150.000. Equity is not greater than the legal reserve, so there is no room for distribution; even in mid-2026, with half a year of profit and amortisation added, equity stays below it. The dividend is not possible. Had Lindeveld, as a small entity, chosen to book the € 150.000 as expenses, equity would also have been € 150.000 lower. Capitalising makes equity larger on paper, not distributable.
By size class
| Class | On the balance sheet | Reserve and notes |
|---|---|---|
| Micro | Only the capitalised incorporation costs separately under fixed assets (art. 2:395a(4) DCC) | Maintain the reserve, even though equity appears as a single amount on the balance sheet; it limits the room for distribution |
| Small | Only incorporation costs (part a) separately; the rest may go in one item of intangible fixed assets (art. 2:396(3) DCC) | Reserve separately under equity; the explanation under paragraph 2 is not among the required disclosures for small. Capitalising development is allowed (RJk B1.105) |
| Medium-sized | All five items; in the published balance sheet only a and d are required separately (art. 2:397(5) DCC) | Reserve and explanation; capitalise development if the criteria are met (RJ 210.224) |
| Large | All five items | As medium-sized |
Common mistakes
- Capitalised development costs without a legal reserve, so that the distributable equity looks too high.
- Not letting the reserve decline with the amortisation, so that after a few years it is higher than the asset.
- Capitalising research costs or a self-built brand.
- Lowering the legal reserve to keep the other reserves positive. A negative other reserves item is then the correct outcome.
- Amortising incorporation costs over more than five years (art. 2:386(3) DCC).
How it works in Jaarrekening.io
Jaarrekening.io compares the capitalised incorporation, issue and development costs with the legal reserves on the balance sheet, for the financial year and the prior year. If the reserve is too low, the app reports that a legal reserve of the amount of those costs must be maintained.
Sources
- Art. 2:365 DCC, text in force from 1 July 2026 (wetten.overheid.nl)
- Overview of amendments to art. 2:365 DCC (wetten.overheid.nl)
- Art. 2:373 DCC: legal reserves (wetten.overheid.nl)
- Art. 2:386 DCC: depreciation (wetten.overheid.nl)
- Art. 2:216 DCC: distributions by the BV (wetten.overheid.nl)
- Dutch Accounting Standards Board (RJ): large bundle
Frequently asked questions
What is the legal reserve for development costs?
If a legal entity capitalises development costs, it must maintain a reserve of the same amount (art. 2:365(2) DCC). This is a legal reserve: that part of equity may not be paid out as dividend. The reserve declines along with the amortisation of the development costs.
Which reserve do you use to form the legal reserve?
It is charged to the other reserves, the share premium or made through the appropriation of profit, at the choice of the competent body. If the free reserves are too small, the other reserves item becomes negative and the legal reserve still stands at the full amount (RJ 240.230 and RJk B8.114).
Must a small BV capitalise development costs?
No. Under RJk B1.105 a micro or small entity may capitalise development costs if the criteria are met, but it is not required to. Medium-sized and large entities must capitalise them once all the criteria of RJ 210.224 are demonstrated. Anyone who capitalises maintains a legal reserve.
Does the legal reserve also apply to goodwill or purchased software?
No. Art. 2:365(2) DCC mentions only the costs of incorporation and of issuing shares and the costs of development. Purchased goodwill, licences and software fall under paragraph 1(c) or (d) and require no reserve.
May I capitalise the incorporation costs of the BV?
The law allows it, with a legal reserve and amortisation within five years at most. The RJ advises against it, because these costs yield no future benefit (RJ 210.103). In practice you book them as expenses; issue costs are then charged directly to the share premium.
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