Bookkeeping glossary

Short explanations of common Dutch bookkeeping and tax terms.

B

Balance sheet: A snapshot of what the business owns (assets) against its debts and equity.
Bank feed: A link between your bank and your accounting software so transactions are imported automatically and matched with invoices.
Bookkeeping: Recording all business income, expenses, assets and debts. You must keep the records for seven years.

Credit note: An invoice that fully or partly reverses an earlier invoice, for example after a return.
Creditor (crediteur): Someone you owe money to, such as a supplier.

Debit and credit: In double-entry bookkeeping each transaction is posted to two accounts: one side is debit, the other credit. Both sides always balance.
Debtor (debiteur): Someone who owes you money, usually a customer with an open invoice.
Deduction (aftrekpost): A cost item you may deduct from your profit or taxable income, such as business expenses.
Depreciation: Spreading the cost of a durable asset (like a laptop or car) over the years you use it.
Double-entry bookkeeping: A system where each entry is recorded on two accounts. Standard for BVs and larger businesses.

EC Sales List (ICP): A summary of your business sales of goods and services to customers in other EU countries.

General ledger (grootboek): The overview of all accounts holding entries, such as cash, bank, revenue and expenses.

Hours criterion: You must spend at least 1,225 hours a year on your business (and more than half your working time) to qualify for entrepreneur deductions.

Input VAT (voorbelasting): The VAT you pay on business purchases, which you can deduct from the VAT you owe in your return.
Invoice (factuur): The document asking a customer for payment. It must meet legal requirements such as date, unique number, VAT amount and VAT number.

KvK number: Registration number at the Dutch Chamber of Commerce. Required on invoices and on your website.

Profit: Revenue minus business costs. Income tax (or corporate tax for a BV) is paid on profit.
Profit and loss account: An overview of income and costs over a period. The difference is your profit or loss.

Retention obligation: You must keep your records and receipts for 7 years (10 years for real estate). Digital storage is allowed.
Revenue (omzet): Total sales excluding VAT in a period. Revenue is not the same as profit.

Self-employed deduction: A fixed deduction from profit for entrepreneurs who meet the hours criterion. The amount is set yearly and is being phased down.
Small business scheme (KOR): A scheme exempting businesses with yearly turnover up to €20,000 from charging VAT. You charge no VAT, but cannot deduct input VAT either.
Small-scale investment deduction (KIA): An extra deduction from profit when you invest in business assets within set amounts.
SME profit exemption: A percentage of your profit after entrepreneur deductions that is exempt from tax.
Sole proprietorship: The simplest legal form: you and the business are legally one. You are personally liable for debts.

UBL / e-invoice: A standardized digital invoice format that lets software process invoices automatically.

VAT (btw): Value added tax. You charge VAT to customers and pay it over to the tax authority, minus the VAT on your own purchases. Dutch rates are 21%, 9% and 0%.
VAT number: The number under which you are registered for VAT. It appears on invoices and starts with NL and ends in B01.
VAT return: A periodic filing (usually quarterly) of the VAT you charged and paid. You pay or reclaim the difference.
VAT reverse charge: For some services (and within the EU) the customer, not the supplier, accounts for VAT in their own return.

ZZP (freelancer): Zelfstandige zonder personeel: a self-employed person without employees, usually running a sole proprietorship.