winstreserve

Winstreserve, literally “profit reserve,” is an accounting term used in Dutch-language financial reporting to describe the portion of a company’s accumulated profits that is retained in the business rather than distributed as dividends. It is a category within shareholders’ equity and represents retained earnings that the company keeps to support operations and future plans.

The winstreserve is formed from annual profits that the company chooses to retain. An appropriation of profits is typically decided by the general meeting after the annual accounts are prepared. Increasing the winstreserve raises the company’s equity and provides funds for future investments, debt service, or contingencies. Its use may be subject to restrictions set by the company’s articles of association, corporate law, or lending covenants.

In accounting, winstreserve is distinct from other types of reserves. It is a form of distributable or non-distributable reserve depending on the jurisdiction and the company’s policy, but it is different from capital reserves (such as reserves from share premiums or asset revaluations) and from specific statutory or designated reserves. The concept of a retained earnings reserve is common in Dutch financial reporting and has parallels in other jurisdictions under different terminology.

Tax treatment and legal rules regarding reserves vary by country. Movements to and from the winstreserve affect distributable profits and the equity base, and they are typically disclosed in the equity section of the balance sheet and accompanying notes. Proper accounting and governance practices require clear documentation of the purpose and restrictions on any transfers involving the winstreserve.

See also: retained earnings, shareholders’ equity, reserve.