Dutch Standard Business Reporting: What Is Changing?
Connected reporting and compliance continues apace on the agenda of the EU. In this blog, we focus on the Dutch government Standard Business Reporting (SBR) initiative.
While SBR is not new in the Netherlands, there are important changes coming up that will affect large businesses. Below, we explore the impact of these changes and share steps that should be taken now to help your organisation prepare.
What is Standard Business Reporting?
Standard Business Reporting (SBR) is the national standard in the Netherlands for the digital exchange of business reports across tax authorities, business registers, banks and other Dutch government agencies.
The SBR initiative goes all the way back to 2003 when the Dutch government kicked off an ambitious reform project. One of the major goals of the project was to reduce the administrative burden on businesses while increasing the transparency of public spending across government.
SBR replaces traditional document-based reporting with standardised and open data formats to make reporting better, faster and simpler.
Over the last several years, many government agencies and affiliated parties such as the Dutch Tax and Customs Administration (Belastingdienst), the Chamber of Commerce (Kamer van Koophandel, or KvK), the housing association (SBR Wonen), the Ministry of Education, Culture and Science, the Central Bureau of Statistics (Statistics Netherlands), along with several of the largest banks, have embraced SBR and harmonised their data definitions, processes and technology.
What is changing?
Starting in 2016 and rolling out progressively over several years, SBR introduced the mandatory filing of Extensible Business Reporting Language® (XBRL) enabled financial statements.
While legal entities in the micro and small business categories have been obliged to file their financial statements electronically since 2016, the requirement for large reporting entities will only come into effect for financial years that start no later than 31 Dec 2019.
The new requirement is not only relevant for any large Dutch company, but also for parent companies with a large Dutch entity. Large entities are classified as businesses that meet two of the following criteria for two successive years:
- Greater than 20 million euros in assets
- Greater than 40 million euros in net turnover
- Greater than 250 employees
Large entities are required to file their financial statements electronically via software that supports SBR. There may be some exceptions permitted for companies to file by post to the KvK or by email.
After submitting the financial statements electronically, they are immediately visible and retrievable in the Handelsregister (Commercial Register). The filing company receives confirmation, including a copy in PDF format, by email, allowing them to immediately verify that it has been properly processed.
SBR and XBRL
SBR applies international open standards, most notably XBRL, and web services in a way that enables a high degree of automation within the business reporting processes, from data aggregation and transfer to validation and processing. This improves the quality of reports since it lowers the number of manual paper-based processes.
With XBRL and SBR, all data definitions are uniquely identifiable and stored in the Dutch Taxonomy which provides a standardised identifying tag for each individual item. Business information reported in XBRL can be easily extracted for reuse in other reports, analytical software and databases while retaining its original, meaningful context.
SBR for large businesses will likely have a greater impact on business processes than what was seen in previous phases. Large businesses generally produce larger, more varied reports and their reporting requirements are more complex.
Therefore, businesses need to understand how SBR will affect their reporting process and timelines, ensure their staff is adequately trained and their software vendor can provide the necessary support.
This also means that large businesses need to think about how they will tag their annual reports in the XBRL format to ensure they are compliant with the new regulations.
What are the benefits of SBR for businesses?
Standardisation: Standardisation allows for improved analysis and reduces reporting overhead by businesses. Additionally, standardisation enables better and faster insights for investors and markets and is the cornerstone of connected reporting and compliance success.
Increased efficiency: Increased efficiency allows businesses to optimise compliance reporting costs whilst redirecting effort into running their business, serving their customers and maximising shareholder value creation.
More transparency: SBR provides high quality and transparent data. It makes it easier for businesses to maintain the accuracy of how data is used and interpreted.
More consistency: SBR delivers the same consistency of data across departments. This reduces the risk for businesses that they will have contradictory data when filing different reports. Additionally, with data definitions harmonised across different government departments, a business only needs to manage one consistent set of data for all of their reports.
SBR and the ESEF
Companies with large listed entities also need to keep an eye on the upcoming introduction of the ESEF for listed companies.
Currently, the two mandates do not have much in common. They have different timelines, different formats (XBRL vs iXBRL®) and even different taxonomies. However, this lack of commonality could create a dual workload for those listed entities.
The European Commission has urged business registers to look at how they can help with this concern and there have also been presentations from SBR authorities asking similar questions. Watch this space for any updates.
How should your organisation approach SBR?
SBR represents a conscious effort by government to reduce red tape, administrative burden, duplication and multiple forms of reporting from business to government. It presents an opportunity for organisations to inject greater efficiency, effectiveness and reliability into their reporting process and ensure they are ready for the more data focused era we are entering.
The new standard represents an acknowledgement by government that connected reporting and compliance is a boon for business. Businesses now have further motivation to accelerate their internal efficiency and insights. This means an opportunity to review and modernise people, processes, data and technology practices and further embed digitisation into their business agendas.
Whilst SBR is bringing regulatory compliance into the digital age, Workiva has been helping modernise the financial reporting processes of organisations for over 10 years through connected reporting and compliance.
If your business is preparing for SBR, reach out to Workiva to see how we can help support your filing.
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