Article 2:377 DCC: the profit and loss account explained

The short answer

Article 2:377 DCC prescribes the structure of the profit and loss account: result from ordinary activities, taxes and result after taxes, broken down by nature of cost (paragraph 3) or by function (paragraph 4). Paragraph 6 defines net turnover, paragraph 8 asks for exceptional items to be shown separately. Micro, small and medium-sized entities may combine lines (art. 2:395a(5), 2:396(4) and 2:397(3) DCC).

Updated 30 October 2026

Key facts

Paragraphs 1 and 2: the framework and the choice between two layouts

1. The profit and loss account shall separately include:

a. the income and expenses from ordinary business activities, the taxes thereon and the result from ordinary business activities after taxes;

b. the other taxes;

c. the result after taxes.

2. The income and expenses from ordinary business activities shall be broken down either in accordance with paragraph 3 or in accordance with paragraph 4.

What this means. Paragraph 1 gives three mandatory steps: first everything that comes from normal business operations, with the tax on it; then any other taxes; finally the result after taxes. Because the law has had no extraordinary income and expenses since 1 November 2015, almost every amount falls under the first step. According to the Besluit modellen jaarrekening, the item other taxes sits directly above the result after taxes; for most BVs it stays empty.

Paragraph 2 lets you choose how to break down operating expenses: by their nature (wages, depreciation, purchases) or by the function for which they were incurred (production, sales, administration). You do not fix that choice anew every year. A different layout than last year is allowed only for sound reasons, and then you explain in the notes what shifts and why (art. 2:363(4) DCC; see article 2:363).

Paragraph 3: the layout by nature of cost

3. The following shall be included separately:

a. net turnover;

b. the increase or decrease in the stock of finished products and work in progress compared with the previous balance sheet date;

c. production capitalised for the entity's own use;

d. other operating income;

e. wages;

f. social security charges, with separate disclosure of pension charges;

g. the cost of raw and consumable materials and other external costs;

h. depreciation and impairments of intangible and tangible fixed assets, broken down by those groups of assets;

i. impairments of current assets, insofar as they exceed the impairments customary for the entity;

j. other operating costs;

k. the result from participating interests;

l. income from other securities and receivables that form part of the fixed assets;

m. other interest income and similar income;

n. changes in the value of financial fixed assets and of securities that form part of the current assets;

o. interest expenses and similar costs.

What this means. Items a to j together form the operating result, k to o the financial income and expenses. A producer that makes more than it sells adds the growth of its own stock to income (item b), and a contractor that builds its own workshop shows that production as income (item c), so that the costs of it do not distort the profit. You split payroll costs into wages and social security charges, with pension charges separate. Depreciation of intangible and tangible fixed assets appears in two amounts.

Item i is often misread. A normal write-down of slow-moving stock or an ordinary addition to the provision for doubtful debtors belongs with the costs it relates to. Only a write-down clearly larger than what is customary for your business gets its own line. In the Besluit modellen jaarrekening this layout is called model E; it is the most widely used in the Netherlands.

Paragraph 4: the layout by function

4. The following shall be included separately:

a. net turnover;

b. the cost of sales, excluding the interest expenses included therein, but including depreciation and impairments;

c. the gross turnover result as the balance of items a and b;

d. selling expenses, including depreciation and extraordinary impairments;

e. general administrative expenses, including depreciation and impairments;

f. other operating income;

g. the result from participating interests;

h. income from other securities and receivables that form part of the fixed assets;

i. other interest income and similar income;

j. changes in the value of financial fixed assets and of securities that form part of the current assets;

k. interest expenses and similar costs.

What this means. With the functional layout you spread all operating expenses over three buckets: what it took to make the products or services sold, what selling cost, and what general administration cost. Depreciation follows the bucket for which the asset is used; the sales department's truck therefore weighs on selling expenses. Interest stays outside the cost of sales. This is model F of the Besluit modellen jaarrekening.

With the functional layout the reader loses sight of payroll costs. That is why art. 2:382 DCC (last sentence) then requires the wages and social security charges in the notes, with pension charges separate; see article 2:382. For a large entity, RJ 270.504 also requires the total of depreciation; a medium-sized one may suffice with the payroll data.

Paragraphs 5 to 8: group relations, net turnover, other financial years and exceptional items

5. For items k-o of paragraph 3 and items g-k of paragraph 4, the income and expenses arising from the relationship with group companies shall be stated separately.

Paragraph 5. Interest that you pay on a loan from your parent company, or interest that you receive from a sister company, is shown separately from interest to or from the bank. This lets the reader see which part of the financial result stays within the group.

6. Net turnover means the income from the supply of goods and services from the entity's business, after deduction of discounts and the like and of taxes levied on turnover.

Paragraph 6. Net turnover is what you earn with your own business, excluding VAT and excise duty and after discounts. A turnover bonus to a customer is deducted; commission to your own salespeople and freight on delivery free of charge are not, as they are costs (RJ 270.202). Money that you only collect and pass on on behalf of someone else, such as the ticket price that a travel agency receives as agent for a tour operator, is not turnover; the commission the travel agency earns itself is. Interest or dividend can be turnover if collecting it is your core activity, for example at a finance company (RJ 270.201, RJk B13.110). See also net turnover.

7. Income and expenses that must be attributed to another financial year shall be explained by nature and size.

8. The amount and nature shall be stated of the items of income and expense that are of exceptional size or occur to an exceptional extent.

Paragraph 7. If an amount comes in or goes out this year that belongs to an earlier year, such as an additional assessment for 2024 or the release of an overestimated warranty provision, you state in the notes what it is and how large it is. A material error in adopted annual accounts is something different: you correct that under the rules for error correction.

Paragraph 8. Income or an expense that is exceptionally large or rarely occurs (the book profit on the sale of the company premises, damages, a reorganisation) you state with amount and nature. For medium-sized and large entities, RJ 270.404 requires that you explain such an item separately and without netting and, if it is spread over several lines, with a breakdown per line. The RJk puts the same breakdown to small entities as something they "may consider" (RJk B13.112); the statutory minimum remains amount and nature.

What each size class includes in the profit and loss account

The class follows from art. 2:395a up to and including 2:397 DCC: two of the three thresholds on two consecutive balance sheet dates. The thresholds below apply to financial years starting on or after 1 January 2024.

Two consequences are often missed. A small BV does not have to file its profit and loss account, but it must still prepare it, adopt it and submit it to the shareholders; see must I publish the profit and loss account. And a medium-sized entity that combines lines gives the turnover development ratio along with it: that figure belongs to the abridged presentation and, for the reader, replaces the omitted turnover amount.

Financial years 2025, 2026 and 2027

The statutory text of article 2:377 is the same for these three financial years. What changes per year is the edition of the guidelines: for medium-sized and large entities RJ 270 in the 2027 edition applies from financial year 2027, for micro and small entities RJk B13 as amended in 2025 applies from financial year 2026. Anyone completing the 2025 annual accounts in 2026 applies the RJk edition for 2025; the definition of net turnover and the combinations per class are the same in that edition.

Elaboration per topic: RJ 270 revenue and profit and loss account, RJ 271 employee benefits for payroll costs and the RJk for micro and small.

Case: a small manufacturing BV and the same figures as a medium-sized one

Meubelmakerij Oosterveld BV (fictitious) makes oak tables. In 2026 it sells for € 3.200.000 excluding VAT, after € 45.000 turnover bonus to two home furnishing stores. The stock of finished product grows by € 40.000, the insurer pays € 25.000 for a week of downtime of the sawing line, and it buys wood, glue and energy for € 1.780.000. Wages are € 820.000, social security charges € 190.000 (of which pension € 60.000), depreciation € 110.000 and other operating costs € 145.000. On the bank loan it pays € 30.000 interest.

Check: 3.200.000 + 40.000 + 25.000 − 1.780.000 = 1.485.000, and 1.485.000 − 820.000 − 190.000 − 110.000 − 145.000 = 220.000. As a small BV, Oosterveld does not file this account. A medium-sized entity does publish the abridged presentation, with the ratio alongside. With these figures and a net turnover of € 2.900.000 in 2025 that is 3.200.000 / 2.900.000 = 1,103: an increase of 10,3%.

If the furniture maker sells its old workshop in the same year with a € 60.000 book profit, it states that profit with amount and nature in the notes (paragraph 8). It books it under other operating income; in the abridged presentation it disappears into the gross operating result, and that is exactly why the disclosure belongs there.

Where it goes wrong in practice

• Booking turnover including VAT, or showing the turnover bonus as a cost item instead of deducting it from turnover.
• Putting a book profit on company premises below the line as an "extraordinary income". That category no longer exists; the amount belongs in the operating result, with a disclosure under paragraph 8.
• With the functional layout, not giving wages and social security charges in the notes (art. 2:382 DCC).
• Merging interest on a loan from the parent company with bank interest, so that paragraph 5 is not followed.
• As a micro entity, thinking no profit and loss account is needed because it is not filed, or as a small BV putting wages into the gross operating result. Wages, social security charges and depreciation fall outside the combination.

How it works in Jaarrekening.io

When you create the entity you choose the by-nature or the by-function model; that model then applies to all financial years of that entity. For a small or medium-sized entity you can show the profit and loss account in abridged form with a gross operating result; for a large entity the app does not offer that abridgement. The first annual accounts in your account are free, for every size class.

Sources

• Art. 2:377 BW: structure of the profit and loss account (wetten.overheid.nl)
• Art. 2:382 BW: employees and payroll costs with functional layout (wetten.overheid.nl)
• Art. 2:395a BW: micro exemptions (wetten.overheid.nl)
• Art. 2:396 BW: exemptions for small entities (wetten.overheid.nl)
• Art. 2:397 BW: exemptions for medium-sized entities (wetten.overheid.nl)
• Besluit modellen jaarrekening (wetten.overheid.nl)
• RJ bundle for medium-sized and large entities (rjnet.nl)
• RJk bundle for micro and small entities (rjnet.nl)

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