Top 3 changes for financial statements as of 1 January 2023
At the end of 2022, the Dutch Accounting Standards Board published new standards applying to the financial statements. “A number of changes for the financial statements starting on or after 1 January 2023 really stand out”, says Inge Oudhuis, Senior Director at PwC. In the new Accounting & Reporting Talk and the publication “Rechtstreeks” she discusses these together with Ying Heemeijer-Xiong.
“According to us, the most important changes are the difference between major maintenance and replacement investments for tangible fixed assets, the recognition of the BPM tax relating to revenue and inventories, and the calculation of provisions. Due to their complexity and size, we will also discuss the fast-changing regulations relating to sustainability reporting in this Accounting & Reporting Talk.”
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26 - Changes to the 2022 Dutch Accounting Standards
Costs of major structural maintenance
“The definitions of the terms significant part and major maintenance costs have now been included in the standards. These definitions have been included to help distinguish between replacement investments and major maintenance in order to recognise them correctly”, Ying tells us. Costs from major maintenance are recognised as part of the book value of the tangible fixed asset or through a provision for major maintenance. A significant part or replacement investment can only be capitalised and depreciated.
Processing BPM tax
In relation to revenue and inventories, Inge explains: “Before, dealers, other car companies and importers of cars and motorcycles could choose whether or not to present the BPM tax as part of their net revenue. The amount of BPM that was included in the net revenue had to be clarified individually. Starting from financial year 2023, this has changed. It is no longer allowed to present the BPM as part of the net revenue and to include the BPM in the acquisition costs of the inventory.”
Calculation provisions
When calculating provisions, future cash flows are often discounted to a present value. Ying: “The DASB has now included in the standards that these present-value calculations must happen consistently. As a rule of thumb, remember that future cash flows including price increases due to inflation can be discounted at a nominal discount rate. If inflation has not been taken into account, the future cash flows should be discounted at a real discount rate.”
“If you start too late, you won’t be able to implement the CSRD in time.”
Sustainability reporting
“But the biggest change for companies in the coming time will lie within sustainability reporting”, Inge concludes. “At the moment, only a small number of standards relating to sustainability reporting apply. Soon, however, the Corporate Sustainability Reporting Directive, also known as the CSRD, will come into effect and the regulations relating to sustainability reporting will increase significantly. From 2024, these regulations will apply to all large listed entities, financial institutions and insurance companies with more than 500 employees to whom the NFRD and the EU Taxonomy currently apply. From 2025, the CSRD will apply to all big corporations. 2025 may seem far away, but these changes demand an enormous transition and preparation from companies. Because the CSRD is called a ‘Reporting Directive’, the risk exists that people think it only encompasses some extra clarification requirements for the board report. It goes a lot further than that. This is why we draw your attention to it already in our newest Accounting & Reporting Talk.”
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