A BV company is incorporated by a Dutch notary. The Dutch notary has all kind of questions for you. Questions such as the name of the BV to be incorporated, the address, number of shares issued, share price, who will be the first director. Among these questions is one about the long first book year BV
When does the first book year end?
Only in the year of incorporation this question is being asked to you. You can answer either this year or next year. What difference does it make? The difference is in time, accounting costs and obligations.
Difference in time
If you contact a notary today (November 2015), then before Christmas your BV company is incorporated, most likely no transactions have taken place yet, but you need to create an annual report already for the period till December 31st next, in which period nothing has happened. That is a bit silly.
Difference in accounting costs
Your accountant will of course advise you to opt for the long book year, even though his heart would say the short period. In the short period implies the financial years ends more or less immediately, so the accountant can process the bookkeeping, make an annual report, publication report and the corporate income tax return. However, that is not to the advantage of the client, hence he will say that the long first financial book year is the best option.
Difference in obligations
The obligations are already mentioned. When a financial year, which equals the calendar year, ends, the BV needs to meet certain obligations. The publication report needs to be filed within max 13 months after the year has closed, the corporate income tax return needs to be filed within 5 months after the year has closed. The board might like to receive discharge in the annual shareholders meeting.
In other words, the choice for the long book year is the logical choice to be made.
Corporate income tax
There comes a moment, whether you have chosen a short or long first financial book year, that the financial year comes to an end. In the Netherlands in general that is December 31st. On that date the balance is fixed and for that period the result needs to be reported. The corporate income tax return is due before June 1, the penalty for filing too late is EUR 4.920. However, in the first year you are too late you receive a 50% discount from the Dutch tax office. Regardless of the discount, you are noted in the tax office system. With or without the discount, this is a so called waist of money. And nobody needs a notification in the tax system for bad behavior.
Orange Tax Services
We assist persons and companies in incorporating a Dutch BV company and help with the questions asked by the notary. At the end of the year we set ourselves the goal to have ready your annual report within two or three months from the moment the financial year has ended. This implies the publication can be done, and in May the corporate income tax return can be filed.
The result is that soon after you closed the financial year, you can actually close the obligations as well as all have been met. You can focus on the year at hand.
You might have notices that multinational stock exchange companies already have their results ready in a couple of days after the financial period has seized. Amazing everything I learn about that, but I assume a team of accountants were already busy on accounts before the year ended. You can do the same. You can already bring us the bookkeeping up to for instance December 1, so the bulk of the bookings are done and little work to be processed in January.
Feel free to contact us how we can assist you with your BV company financial and fiscal obligations.