Professional foreign investors may set up investment funds in the Netherlands in accordance with the local legislation. They can also use one of the legal entities provided for in the Dutch Commercial Code. It is important to know that investors can use both corporate and non-corporate entities, such as funds for joint account, when establishing their investment funds in the Netherlands. As for the corporate entities they can employ are private limited liability companies (BV) anf public companies (NV).
Our company registration agents in the Netherlands can assist foreign investors in setting up both types of companies as investment fund vehicles.
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Types of investment funds in the Netherlands
The Netherlands is a very appealing investment fund destination because both professional and non-professional investors can set up various types of funds with the help of BV and NV companies. Depending on the chosen structure, the registration requirements for the Dutch fund will be established.
Here are the types of funds that can be established in the Netherlands:
- UCITS or Undertakings for Collective Investment in Transferable Securities which are popular across Europe;
- non-retail UCITS funds which are usually created with the help of non-corporate legal structures;
- AIFs or Alternative Investment Funds which are also quite common in other European Union countries;
- exempt funds which are not very popular among professional investors in the Netherlands.
No matter the type of fund you decide to set up, our Dutch company formation consultants can help you choose and register an appropriate investment vehicle under the form of a BV or NV.
Share capital requirements for Dutch funds
When setting up an investment fund, no matter if the chosen structure is a BV, NV, or a non-corporate legal entity, it is good to know that there are two share capital requirements which need to be met. The first one is related to the share capital of the fund, while in the case of BV and NV for investment purposes there is also the capital requirement of the chosen structure.
Open-ended and closed-ended retail funds require a minimum amount of 125,000 euros for assets below 250 million euros held under administration, and 225,000 euros if the value of these assets exceeds 250,000 million euros. Part from these, every participant in the fund must contribute with a minimum of 100,000 euros. When choosing to set up the Dutch fund through a NV company, another 45,000 euros must be added as a share capital of chosen business form.
Foreign investors who cannot decide on whether to choose between a BV and NV for setting up investment funds can rely on the expertise of our company registration consultants in the Netherlands who can guide them.
The BV and NV for investment purposes in the Netherlands
The company registration procedure for a Dutch private limited company or for a public company as an investment vehicle is the same as for any commercial activity. The first step to follow is to register the company with the Dutch Trade Register. As a public company, the NV must have a minimum share capital of 45,000 euros. Both the BV and the NV used as investment vehicles in the Netherlands may issue ordinary, priority or preference shares. However, only the NV may trade these shares on the Dutch or other capital markets. With respect to shareholders, they must provide their details with the Trade Register no matter if the fund is licensed or not by the Dutch financial authority.
Depending on the type of investment fund to be set up, there are certain restrictions related to the directors of the BV or NV used for this purpose.
We also invite you to watch our video on the BV and NV establishment as investment purpose vehicles in the Netherlands:
Advantages of choosing a BV for setting up a Dutch fund
The Dutch private limited liability company is the most popular business form among local and foreign investors not only because it can be used for creating an investment fund, but also because it can be used for other purposes, such as trading. The Dutch BV can be used as a tax minimization vehicle, which is useful when setting up an investment fund.
The requirements related to creating a fund through a BV in the Netherlands are simpler than those required for a NV, while the registration process is completed in a matter of days. Also, there are no share capital requirements used for the investment company when incorporating it as a BV.
Other than that, there are plenty of similarities between the Dutch BV and NV for investment purposes, among which the most important refers to the possibility of issuing shares.
Why register a Dutch NV for an investment fund?
The second corporate structure that can be used for registering a Dutch investment fund is the public company. By comparison with the BV, the shares issued by the NV can be traded on the stock exchange. Another advantage of the NV refers to the fact that it can be used to set up investment companies with a variable capital, the so-called ICVCs, which are often employed by EU investors. The ICVC company can also be used for the creation of umbrella and hedge funds in the Netherlands.
No matter the chosen structure, the authorization of the fund must be obtained with the Dutch Financial Markets Authority.
If you want to open a company in the Netherlands which can be used to create an investment fund, you can rely on our local advisors.
Management conditions for BV and NV used as Dutch investment vehicles
While the corporate structures for both the BV and NV remain the same when using them for investment purposes, investors should know that the manager of the fund must be licensed under the AIFM (Alternative Investment Funds Manager) Directive. The manager of the fund may be an individual or a company domiciled in the Netherlands or the EU. AIF mangers registered outside the EU may also offer their services in the Netherlands.
Tax differences between BVs and BVs for Dutch funds
An important aspect to consider when setting up an investment fund in the Netherlands is related to its taxation. This is because, the taxation of Dutch funds depends on the structure chosen for the investment company. There are 3 taxation regimes imposed on investment funds, and these are the regular regime, the Fiscal Investment Institution (FII) regime and the Exempt Investment Institution (EII) regime. While the BV set up for investment purposes will be taxed under the FII regime, the NV can be subject to all 3 taxation regimes.
Here are the main taxes to be paid by Dutch investment funds:
- – BV companies will be imposed with a 15% withholding tax on dividend payments;
- – the corporate tax can also be imposed on BV companies treated as non-transparent entities (the rates are 20% and 25%);
- – individuals can be taxed based on their interest in the fund at a rate of 4% on their net wealth at the beginning of the calendar year;
- – non-resident individual investors will be levied the 15% dividend tax unless a double tax treaty with the Netherlands is in place.
For complete information on the legislation governing investment funds in the Netherlands, please feel free to contact us. You can also rely on our Dutch company formation consultants for establishing an investment fund here.