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Regulations on Investment Vehicles in the Netherlands

Regulations on Investment Vehicles in the Netherlands

The Dutch legislation on investment funds favors those seeking to invest in this industry. With EU directives integrated in its local laws, the Netherlands is open for both foreign investors opening investment funds here and for fund managers who can use their passporting rights to offer their services in and outside the country.

Establishing an investment fund in the Netherlands is quite simple, provided that the license with the supervising financial authority is obtained and the appropriate type of vehicle is used. Foreign investors must know that they use both corporate and non-corporate vehicles when setting up investment funds in the Netherlands.

You can rely on our company formation agents in the Netherlands for detailed information on the legislation related to investment funds and vehicles in this country. You can also rely on us if you need help in setting up a Dutch investment fund.

The main laws regulating Dutch investment funds

Before choosing the investment vehicle under which a Dutch fund will operate, it is useful to get acquainted with the legislation governing investments funds. Under the Dutch legislation, funds can be established by respecting:

  1. the Undertakings for Collective Investment in Transferable Securities (UCITS) Regulations;
  2. the Alternative Investment Funds (AIFs) and the Alternative Investment Fund Managers Directive (AIFMD);
  3. the Company Law which provides for the legal structures that can be used to register investment funds in the Netherlands;
  4. The Markets in Financial Instruments Directive (MiFID II) which provides for the assets that can be managed by an investment fund manager;
  5. the Dutch Financial Supervision Act (FSA) which provides for the taxation of investment funds operating in the Netherlands.

Other regulations may apply depending on the types of funds created in the Netherlands. For example, pension funds are also subject to the Dutch Pension Act.

Our Dutch company formation consultants can offer detailed information on the legislation governing investment funds and the vehicles used to create such funds.

The main types of investment vehicles in the Netherlands

The investment vehicles used to create Dutch funds are divided into two categories: corporate and non-corporate entities. The most popular corporate vehicles are the limited liability company (BV) and the public company (NV). Among the non-corporate entities, we can mention the limited partnership and the fund for joint account.

Co-operatives and associations can also be used to create investment funds in the Netherlands. They enter the non-corporate structures that can be used for the incorporation of a fund in this country.

Each category of vehicles has its advantages and our local consultants can offer detailed information on the requirements for creating investment funds under corporate and non-corporate entities.

Regulations related to Dutch corporate investment fund vehicles

As any other country, the Netherlands imposes certain regulations related to establishing an investment fund and the vehicle used for its launching. The main types of corporate investment fund vehicles one can employ in the Netherlands are the limited liability company (BV) and the public limited company or joint stock corporation (NV). Another type of vehicle used to set up investment funds in the Netherlands is the investment company with a variable capital. This type of vehicle derives from the NV and is usually employed for establishing investment funds as the share capital requirements do not apply in its case.

The cooperative is not a corporate entity, but an association and can be used to set up investment funds in the Netherlands. These types of structures resemble the non-corporate entities and can be established by notarial deed.

Our company registration agents in the Netherlands can assist foreign investors who want to set up any of these types of vehicles.

Non-corporate investment funds vehicles in the Netherlands

There are two types of non-corporate vehicles used for establishing investment funds in the Netherlands: the limited partnership and the fund for joint account, shortly referred to as FGR. These are simple vehicles which can be set up by signing a notarial deed. Both types of vehicles can be established as tax or non-tax transparent entities.

Why choose corporate vehicles for setting up a Dutch fund?

Foreign investors seeking to understand the regulations on investment vehicles in the Netherlands should note that the BV and the NV are very popular among foreign investors who want to open investment funds in the Netherlands. However, the BV remains a preferred structure for both investment funds but also for those who want to open a company in the Netherlands.

The creation of a fund by using a corporate entity resides in the fact that it can issue shares which is an easy way of raising money. Corporate entities can also be used for the creation of Initial Coin Offerings (ICOs) and cryptocurrency funds.

You can ask our company registration advisors in the Netherlands for information on the latest regulations related to the creation of new-generation investment funds, such as cryptocurrency-related ones.

The advantages of non-corporate entities in the Netherlands

The most important advantage of using a non-corporate vehicle for starting a Dutch investment fund is the easy registration procedure. The notarial deed is the only documents that needs to be drafted in order to create a limited partnership or a co-operative. However, this document does not exempt the  investors from preparing the prospectus of the fund and filing it for approval with the Dutch Financial Markets Supervisory Authority (AFM).

Taxation of Dutch investment vehicles

From a taxation point of view, the vehicles used to create investment funds will have an important influence on the Dutch funds which are usually subject to:

The BV and the NV can be taxed under the regular and FII regimes, respectively all 3 taxation systems in the case of Dutch NVs. Only the FGR can choose one of the 3 regimes, while the cooperative can be subject to the regular regime. Also, the limited partnership will be taxed under the regular regime when used as an investment vehicle in the Netherlands.

From a taxation point of view, a Dutch fund must consider:

  • – the 15% withholding tax on dividends which is usually levied on BV and NV companies;
  • – the corporate tax applicable at rates of 20% or 25% when the funds is set up as a non-transparent entity;
  • – the 4% wealth tax levied on individual investors based on their interests in funds;
  • – non-resident individual investors must also consider the 15% withholding tax on dividends.

For assistance in setting up vehicles dedicated for investment funds, please contact our Dutch company formation consultants.