We at Global Connect Admin are busy preparing new content and a new company website!
Stay tuned for more, as we will start updating soon!
We at Global Connect Admin are busy preparing new content and a new company website!
Stay tuned for more, as we will start updating soon!
From paper to digital, from local to international standards (such as IFRS). Annual changes are no longer a surprise for companies. In addition to local rules and standards, more and more companies are confronted with international innovations, such as the influence of the Standard Business Reporting (SBR) system. For example, the XBRL format is not new and is not mandatory for everyone. Yet, it is fiscally helpful to keep an eye on updates regarding XBRL. This article briefly explains what XBRL is all about and how you can prepare for any (future) obligations.
XBRL in a nutshell
XBRL (EXtensible Markup Language) is an open international standard for digital business reporting. Millions of XBRL documents are added every year, with paper reports replaced by more effective and accurate digital versions. With XBRL, reporting terms can be authoritatively defined. Furthermore, you can represent the contents of financial statements, compliance, performance and business reports. For example, you can convert paper, PDF, and HTML-based reports into a digital XBRL-format in no time, allowing for quickly and accurately moving information between organizations. Therefore, using XBRL allows more people to use, share and analyze the data.
With XBRL, organizations can publish reports to ensure that the content can be accurately consumed and analyzed. Following a set of business and logical rules will go smoother and captures any errors at the source, ensuring error avoidance. In addition, it is crucial to ensure that the data provided conforms to advanced pre-defined definitions and taxonomies, which vary by country. The user can customize language and currency in their preferred style as well. Finally, comprehensive taxonomies and accurate tags allow for continued preparation, validation, publication, exchange, consumption and analysis.
XBRL in the Netherlands: From Micro to Large Enterprises
As of the financial year 2016 (1 January 2017), micro and small enterprises are no longer allowed to deposit publication documents via paper. In the Netherlands, electronic deposits are made through SBR, a digital delivery via Digipoort, by the intermediary or entrepreneur. In addition to this SBR method, entrepreneurs can also use the online service of the Dutch Chamber of Commerce, where they can deposit annual reports.
From the financial year 2017 (1 January 2018), the mandatory digital depositing also applies to medium-sized companies, except for medium-sized subsidiaries with a large company or listed company as a parent company. Large companies will still be excluded from the obligation in 2021.
Meanwhile, listed companies must adhere to the European Securities and Markets Authority (ESMA). ESMA prescribes that European listed companies must file their deposit accounts from the 2020 financial year based on ESEF (European Single Electronic Format).
At present, further mandates of XBRL and ESEF are still underway, with delays related to the current pandemic. Nevertheless, the first official Dutch ESEF publication was included in February 2021. Furthermore, SBR has set goals for organizations in the Netherlands to help exchange data in a structured, standardized and electronic manner according to a fast, effective and error-free method. SBR will continue to collaborate with the Dutch government. However, they will also collaborate with other organizations.
The technical aspect of XBRL and XBRL-based software is often underestimated. Especially for large international companies, a good eye for detail can make all the difference in complex situations. XBRL itself is not a commercial product. However, XBRL-certified organizations and software vendors offer specific applications and services. They can significantly speed up and simplify the processing process. An example of a software supplier and service provider is Amelkis. With the Amelkis XBRL software, companies can import PDF registration documents and quickly convert them to HTML. In addition, they offer workshops for full software support. Therefore, they help hundreds of organizations every year with XBR-related matters, such as exchanging data between systems and periodically compiling reports from various sources.
In the end, there are several advantages to invest in commercial XBRL software. For example, the larger and more complex a company structure, the more tags and details apply. Subsequently, the ESEF requirements and the accounting standards selected by the organization must also be taken into account. With XBRL-software, you can process XBRL-based data in any XBRL-enabled software. In addition, the XBRL format is based on taxonomies, with tags depending on the need or demand. In addition, to save much time, you do not always have to re-enter specific data in the software.
Making the right choices can be challenging. In addition, constant updates from SBR, XBRL International and local governments require constant attention. If you have any questions about your business situation, please do not hesitate to contact us. Although XBRL may or may not be mandatory for your company, being well-prepared creates more certainty in the long term. A good start is half the work, which we are happy to help you with.
Header image by Mikael Bomkvist
Every year organizations, accountants and regulators keep up to date with local and international rules and laws regarding accounting and finance. In recent years, digitalization is rapidly growing, including electronic formats and reports. Therefore more European countries start to apply the European Single Electronic Format (ESEF). While the world of financial services moves towards international standards and formats instead of localized ones, each country does this at its own pace. What can we expect from ESEF, and why is it convenient to use this electronic reporting format to prepare annual financial reports?
ESEF is assigned by the European Securities and Markets Authority (ESMA), an independent EU Authority. ESMA has one mission in mind: enhancing investor protection and promoting stable and orderly financial markets. Therefore, this EU Authority safeguards the stability of the EU’s financial system. This safeguarding includes the protection of investors while promoting stable and orderly financial markets. They mainly assess risks to investors and markets, contribute to a rulebook for EU financial markets, and promote supervisory convergence and directly supervising specific financial entities.
ESMA wishes to make reporting easier for issuers and facilitate accessibility, analysis and comparability of annual financial reports. The digitalization of annual financial statements in the EU is nothing new; in 2013, the Transparency Directive amended a requirement for electronic reporting formats. Only recently, ESEF became mandatory, with the following criteria:
ESEF is more than just the digitalization of financial reports. To ensure your company publishes the annual financial statements correctly, constant attention to detail is in order. While ESEF is mandatory in the EU, the XBRL-format is still in the application process. Even with one format and one accounting standard, per country rules and annual reporting laws may differ. We at Global Connect Admin BV make sure we stay up-to-date with local changes, so if you have any questions, or wish assistance regarding ESEF, fiscal reporting and cross-border transactions, feel free to contact us anytime. We would love to help out.
The Global Connect Admin Team wishes you Happy Easter Holidays!
It has been over ten years since the Great East Japan Earthquake hit Fukushima. Thanks to worldwide support and Fukushima’s rebuilding and cleanup projects in Japan, the prefecture is slowly but surely making an economic recovery. The road to full recovery is not yet finished. However, what if you want to invest or start a business in Fukushima? Is it better to wait another ten years, or are there exciting opportunities for foreign companies? Let’s look at the Japanese prefecture that is mainly known for the earthquake and nuclear disaster.
Restoring the image of Fukushima
In February 2021, the Fukushima Ambassadors of Reconstruction (ふくしま復興大使) published a video explaining the rebuilding of Fukushima and conveying their gratitude to the received support and aid. They are well aware Fukushima is still recovering; however, they want the whole world to know that living and working in Fukushima is not equivalent to nuclear danger. For the prefecture to fully recover and for (foreign) businesses to fully employ, local and national governments need to continue and alter their support.
Fukushima is a prefecture with around 2,8 million inhabitants, with a GDP of 7,399,860 million Yen in 2014¹. From a business perspective, the main challenges are the aftermath of the nuclear disaster and finding the region’s industries and economy’s strengths. However, there are many opportunities if your business or organization is part of the following sectors and industries:
¹Based on the Prefectural Citizens’ Economic Accounts of 2014 by the Cabinet Office
Incentives, subsidies and tax
Suppose you want to do business in Fukushima Prefecture or Fukushima City. In that case, the Fukushima government provides a subsidy of up to 50% of the designated land acquisition cost to support enterprise establishment. There is a subsidy system for foreign companies as well, for the costs of renting facilities, payment of utilities, management consulting fees, and personnel expenses. Furthermore, the Japanese and prefectural governments offer other subsidy systems and preferential tax systems, such as exempting corporate tax for five years.
You can receive a subsidy worth 50% of the land acquisition cost when you acquire 1.5 ha or more of an industrial park, invest 150 million yen or more in fixed assets, and start operating within three years of acquiring the land (30% for under 1.5). In addition, when you acquire privately-owned land and construct new bases in industrial regions, 5% of the acquisition cost is subsidized. In the case of R&D companies in medical care, medical welfare and/or renewable energy, this will be 10% instead of 5%.
Another subsidy for the promotion of employment is available when a company received a subsidy for land acquisition or was established in the mayor’s area and continuously employs new local employees for more than a year.
Suppose you employ more than five new local employees within a year or more since the start of operating. In that case, a three-year subsidy of 500,000 yen per employer is available if your company has received land acquisition grants. Once again, if your organization is medical and welfare-related and/or focuses on renewable energy R&D, you can enjoy a five-year subsidy instead of a three-year one. Furthermore, 50% of office rents are subsidized for three years as well.
Fukushima Special Zone Taxation for the Promotion of Industry Revival Investment
The manufacturing-related industry can benefit from Preferential Tax Treatment. This Treatment contains the following:
There is still much work to be done before Fukushima Prefecture is its old self. If you and your business want to assist Japanese communities and organizations hit by natural disasters, you can do so on the Japanese Red Cross Society website.
If you are looking for a professional to help you find your Fukushima business opportunities, do not hesitate to talk to us. We can either help you with this or help you find someone who can!
Related GCA articles
The Global Connect Admin Team wishes you a Happy International Women’s Day!
The road to gender equality is far from over, however, we have some interesting insights for you on developments in the Netherlands:
The four sets of accounting standards in Japan are the International Financial Reporting Standards (IFRS), Japanese Generally Accepted Accounting Principles (J-GAAP), Japan’s Modified International Standards (JMIS) and the United States Generally Accepted Accounting Principles (US GAAP). In this article, we explain why IFRS and J-GAAP are the most prominent accounting standards in Japan. Whereas J-GAAP is mostly used for Japanese small-medium enterprises (SMEs), more and more Japanese companies apply to IFRS every year. As a Japanese company, with or without (foreign) subsidiaries, what should you keep in mind when applying these standards? Is it more convenient to use J-GAAP since it is well implemented? Or is it perhaps more desirable to choose IFRS since this method makes comparing per country more convenient?
IFRS in Japan
IFRS is principle-based, emphasizes balance sheets, and has global standards, with a flexible implementation convenient to use and easy to understand. Both Japan and the US implement GAAP but have adopted IFRS as a bylaw principle. This is a set of detailed rules regarding accounting standards, interpretation guidelines, practical guidelines and more. However, the rules are roughly sketched compared to J-GAAP. Many notes need to be taken with efficient substantiation for a sufficient interpretation of details per company and country. Unlike J-GAAP, IFRS includes non-operating income as ‘other operating income’ and ‘other operating expenses.’
In Japan, the income statement is emphasized as information for evaluating the asset value required for investors and creditors and the profit and loss statement for a certain period. Japanese accounting standards implement ‘ordinary’ and ‘extraordinary’ profit and loss. Non-operating income – such as dividends and stock interests, deposits and savings – and operating income – such as main business profit – are included. After deducting non-operating expenses (e.g., loss on sales of interest payments and loans), ordinary income is an essential indicator of corporate profitability under the Japanese accounting standards.
IFRS versus J-GAAP
For companies with a subsidiary or subsidiaries overseas, the implementation of IFRS can unify the accounting indicators: Accounting management becomes convenient by comparing everyone’s performance efficiently. Japanese companies without subsidiaries can apply to IFRS as well if they have a capital of 2 billion yen or more, or are newly registered to the stock market. The application is voluntary, as a de facto national policy. At this moment (March 2021), no conclusion has been reached by the Japanese government regarding compulsory applications.
As stated by the Companies Act, disclosure under J-GAAP is still required, so companies have to prepare multiple reports for both IFRS and the Japanese accounting standards. As IFRS is based on principles, a significant amount of information is necessary, which increases the amount of clerical work involved and the burden on the person in charge.
‘Goodwill’ is the difference between a company’s acquisition price and its book value. Under J-GAAP, a fixed amount is amortized and expensed every year, so profits in the account settlements will inevitably decrease. Goodwill must be amortized within every 20 year acquisition period, but in IFRS, this is not the case. In the IFRS case, goodwill is amortized unless the corporate value drops significantly, resulting in not being recorded as an expense. The value decreases after each period, registered as an impairment loss without amortization.
It will cost a certain amount of money to switch from J-GAAP to IFRS. Changing standards, systems, and audits costs time and money, making companies think twice before switching systems, especially if they choose to do business in Japan only.
Companies that are active in mergers and acquisitions (M&A) can profit in their financial results with IFRS. Since IFRS is a globally used method, many foreign investors understand IFRS better than J-GAAP. Examples of companies applying IFRS that are active in M&A are Rakuten and Softbank.
In December 2018, Japan erased the variances between IFRS and J-GAAP, by bridging the gaps. However, IFRS is different from Japanese conventional accounting standards, which can make application challenging. IFRS is frequently revised, so companies have to consider this as well. As mentioned before, Japanese companies adopting IFRS are increasing but compared to the world, the number of applications is still small, making referred information scarce.
In Japan, J-GAAP still mostly applied standard; however, with global IFRS support and more Japanese companies applying this standard, IFRS is most likely the accounting future for Japan. IFRS is frequently revised and has different rules than J-GAAP, so you need to keep up to-to-date with the latest information and knowledge, which is both rewarding yet time and cost-consuming. This track of data can be quite challenging, so many companies leave this part to an expert. If you are looking for an expert to help you with this, feel free to contact us. Global Connect Admin (GCA) already helps multinationals with subsidiaries with IFRS standards, accounting and financial management, and fiscal reports. While they focus on their core business, we assist them with their financial business. Feel free to ask us questions or read other GCA articles.
Related GCA articles