The Netherlands offers very advantageous conditions for the establishment of investment funds. Among these, the legislation which incorporates the most important EU directives and the tax benefits are what attract professional foreign investors. When it comes to the type of entities, one can choose from several legal structures which can be legal or contractual. Among the structures with a legal personality, one can choose between the limited liability company, the investment company, the partnership and the cooperative, while the contractual form available is the fund for joint account.
Our Dutch company formation agents can assist foreign investors with the establishment of investment funds. We can also guide you through the creation of a Dutch cooperative for investment purposes.
Table of Contents
The cooperative as a legal entity in the Netherlands
The cooperative does not fall under the Dutch Company Law, but it is regulated by the Law on Associations. This makes it a good choice for foreign investors seeking to have their own businesses in the Netherlands. The cooperative can be used by both natural persons and legal entities from foreign countries who want to incorporate companies or set up investment funds in the Netherlands. Also, from a legal point of view, the cooperative is required to keep a record of members.
The cooperative is often compared to the Dutch private limited liability company (BV) when it comes to its legal personality, as it also offers limited liability to the members and flexibility when it comes to what it can be employed for. Also, when setting up a coop the rights to profits and voting can be changed without the necessity of going to a public notary in the Netherlands.
When used for real estate investments, the Dutch cooperative can obtain dividend tax exemptions.
The cooperative for investments in the Netherlands can assign voting and profit rights to its members in accordance with their contributions. From this point of view, the coop will operate just like a BV used for investment purposes. However, the coop will be more flexible when it comes to adding more members and capital injections.
Our company registration advisors in the Netherlands can offer more information on the cooperative for investments. We can also assist in registering such a legal entity.
Please watch our video on how to set up a Dutch coop for investments:
What is a Dutch cooperative (coop)?
The cooperative is highly employed for investment purposes in the Netherlands because it is very easy to set up. The cooperative can be defined as an association and investors must only draft a deed which will be notarized in order to set it up. The Dutch coop for investment will also have a legal personality.
One of the most important advantages of the cooperative is that it does not require a minimum share capital, however, when used as an investment fund vehicle the investors must respect the requirements of the Dutch financial supervisory authority related to solvency. Also, the capital can be expressed in any currency.
Requirements for creating a Dutch coop
There are various requirements related to setting up a Dutch coop for investments. Among these, we mention the following:
- it must be registered by at least 2 members, however, it cannot issue shares to these members;
- a notarial deed must be drafted by a public notary in the Netherlands upon the creation of a coop;
- it must appoint a board of directors who can be Dutch or foreign residents;
- at least one annual meeting of the members and board of directors must be established upon its creation.
It is quite simple to create a cooperative, however, when using such a structure to open an investment fund in the Netherlands, the fund legislation must also be respected. For this purpose, the future members of the cooperative must decide on the type of investment fund they want to set up and to comply with the legal requirements in this sense. A prospectus must also be created and submitted for approval with the Dutch Financial Markets Authority.
It is useful to note that most of the times the Dutch coop is employed for the creation of real estate investment funds.
With a vast experience in the creation of investment funds, our company formation advisors in the Netherlands can help you register a cooperative for investments.
The most common uses of a Dutch cooperative
When creating a Dutch cooperative for investments it is good to know that it can also be used for the incorporation of a holding company. This is because the cooperative is an attractive legal entity for private investments. However, when used for holding purposes, the subsidiary company should be a private limited liability company.
If you want to open a company in the Netherlands, our local consultants can help you.
How to register a Dutch coop for investment purposes?
When setting up a cooperative for investment purposes in the Netherlands the participants will enter in member accounts and will have voting rights which will be stipulated in the coop’s constitutive documents. These documents must also be filed with the financial supervisory authority for approval.
The greatest advantage of Dutch coops over investment companies is that they can limit the liability of the participants. Also, from a taxation point of view, the Dutch cooperative can benefit from withholding tax exemptions when distributing the profits to investors no matter their resident country. This is also what differentiates Dutch cooperatives from investment vehicles in other countries.
The Dutch coop from a taxation point of view
One of the main reasons for setting up a Dutch coop for investments is taxation. Before being created, an advance tax ruling can be obtained when the members in the cooperative are foreign investor which is one of the most important advantages of using the cooperative as an investment vehicle.
The cooperative will usually be subject to the standard corporate tax rates of 20% and 25%, however, it is exempt from the withholding tax on dividends. The members in a Dutch coop can also take advantage of the Netherlands’ double tax agreements.
When using the cooperative as a holding structure, it can benefit from the EU Parent-Subsidiary Directive, as long as the non-resident members own at least 5% of the interest in the Dutch coop.
We can help with tailored accounting services for foreign investors setting up various investment vehicles in the Netherlands.
Foreign investments in the Netherlands
According to the Invest in Holland agency, in 2019:
- – 50% of the Netherlands’ Gross Domestic Product comes from foreign investments;
- – the country ranks 3rd in the world in terms of logistics infrastructure and performance;
- – it ranked 4th in the EU’s 2019 European Innovation Scoreboard;
- – it also ranked 5th happiest place on earth by the World Happiness Report in 2019.
For assistance in setting up a coop for investment, please contact our company registration consultants in the Netherlands.