Many foreign entrepreneurs choose the Netherlands for opening an investment fund because this country offers a business-friendly environment, a special taxation regime for this type of funds and it is a well-known destination for business operations.
– the Undertakings for Collective Investment in Transferable Securities (UCITS) Regulations,
– Alternative Investment Funds (AIFs) and the Alternative Investment Fund Managers Directive (AIFMD),
– Markets in Financial Instruments Directive (MiFID II),
– Dutch Financial Supervision Act
Investment funds categories in the Netherlands
– Undertakings for Collective Investment in Transferable Securities (UCITS),
– Alternative Investment Funds (AIFs)
Undertakings for Collective Investment in Transferable Securities (UCITS) features
Investments must be made in liquid financial instruments, risk-spreading requirements must be met, funds must be gathered from the public.
|Alternative Investment Funds (AIFs) characteristics
|These types of investment funds in the Netherlands rely on defined investment policies and must gather funds from various types of investors.
|Legal structures to create investment funds under
– private limited liability company (BV),
– public company (NV),
– limited partnership (CV),
– fund for joint account (FGR)
|Minimum share capital for a Dutch investment fund
The minimum amounts depend on the types of investment funds in the Netherlands:
– EUR 125,000 if the assets are valued at less than EUR 250 million,
– EUR 225,000 if the assets exceed this amount
|Types of investors addressed
– unqualified investors
|Fund manager requirements
Fund managers must comply with the Alternative Investment Fund Managers (AIFM) Directive
Dutch National Bank and Authority of Financial Markets
|Special licensing requirements (YES/NO)
|Yes, licenses are issued by the Authority of Financial Markets
|Timeframe to incorporate an investment fund
Approx. 12 months
|Taxation of investment funds in the Netherlands
Investment funds in the Netherlands can be taxed under 3 regimes:
– the Fiscal Investment Institution,
– the Exempt Investment Institution,
– the regular regime
|Passporting rights availability (YES/NO)
Yes, Dutch investment funds registered under EU regulations can obtain passporting rights.
|Advantages of opening investment funds in the Netherlands
– very well-regulated provisions and market,
– advantageous taxation system,
– multiple options in terms of legal entities for registration
|Assistance in creating Dutch investment funds (YES/NO)
|Yes, we can help investors create various types of investment funds in the Netherlands.
Providing a stable economic and political environment and a large number of double taxation treaties, the Netherlands has become one of the most wanted financial centers for opening an investment fund. It offers a legal and tax framework that is attractive for both local and foreign investors.
Below, we invite you to read about the main types of investment funds in the Netherlands. With a vast experience in Dutch company formation, our specialists can help you set up an investment fund in this country.
Table of Contents
The main types of Dutch investment funds
There are several types of investment funds that are regulated in the Netherlands: UCITS (Undertakings for Collective Investment in Transferable Securities), that are also available in Luxembourg, and AIFs (Alternative Investment Funds). Other types of investment funds which can be set up in the Netherlands are the non-retail UCITS and the exempt funds. However, these are seldom employed in the Netherlands.
All structures are regulated at the EU level and one of the most important rules is the Alternative Investment Fund Managers Directive (AIFMD) related to managers of the alternative investment funds (AIF).
Alternative investment funds (AIFs) in the Netherlands
Out of all investment funds in the Netherlands, AIFs are among the preferred by foreign investors. These are usually organized in the form of a limited partnership (commanditaire), depending on the tax assessments conducted with respect to them. They can also be established co-operatives, funds for joint accounts, private limited liability companies, or a mix between funds for joint accounts and limited liability companies.
AIFs are the main category of funds regulated by the national legislation and they encompass other structures investors can use to make profits. Among these are hedge funds, debt funds, and real estate funds.
According to Dutch legislation, the alternative investment fund manager (AIFM) of an AIF, rather than the AIF itself, is subject to regulation and supervision regarding externally managed AIFs (unless the latter is managed internally).
Under the Act on Financial Supervision, unless an exemption or exception applies, an AIFM is not allowed to manage an AIF or market interests in an AIF in the Netherlands without a license from the Financial Markets Authority. However, Dutch AIFMs that use the “small managers registration regime” (the “Small Managers Regime”) of Section 2 (66a) of the AFS are exempt from the license requirement.
If you decide to open an investment fund, you can rely on our company registration advisors in the Netherlands for detailed information on the regulations you need to comply with.
Retail funds in the Netherlands
Another type of investment funds in the Netherlands are retail ones.
Retail funds, such as UCITS funds, are frequently set up as FGRs or public limited liability companies (NV) with the legal designation of investment institutions with variable capital.
Both the Open FGR and the NV are suitable for the creation of umbrella funds as well as open-end and closed-end funds. Both shares in the NV and participations in the FGR may be listed on a stock exchange.
Our local consultants can help you set up the legal entities accepted by the law in order to run investment funds in the Netherlands.
Venture capital in the Netherlands
In recent years, one of the most popular types of investment funds in the Netherlands is venture capital funds.
A Dutch venture capital fund is a type of investment fund that focuses on taking on high-risk bets on innovative or quickly expanding businesses. These companies usually operate in a certain industry or sector. According to the Dutch Trade Register, businesses can apply for funding from venture capital funds. Around EUR 200,000 in initial capital is provided in exchange for shares. Between EUR 1 and 3 million are often invested in companies seeking for funding.
The creation of a venture capital fund in the Netherlands is the same as for any other investment company, the main difference residing in the investment strategy employed.
Hedge funds in the Netherlands
The Alternative Investment Fund Manager Directive (AIFMD) is the main law that applies to Dutch hedge funds. The AIFMD regulations have been incorporated into Netherlands’ national law.
Businessmen who are interested in setting up a hedge fund in the Netherlands should be aware that they must first choose the fund’s organizational structure.
This type of fund in the Netherlands can be created as one of the following:
- investment company;
- investment fund.
In the Netherlands, there are several legal entities that can be used to form hedge funds. There are 4 different types of structures that can be used for this, namely:
- the private and public (NV) limited liability companies;
- the limited partnerships and funds for joint accounts.
Dutch hedge funds may also be established as cooperatives. You can choose from any of these business forms to start a hedge fund, but there are a number of crucial factors to take into account, one of which is taxation.
As said above, hedge funds are subject to a number of different tax laws in the Netherlands. These are:
- the standard taxation regime, which includes corporation and dividend withholding taxes;
- the Fiscal Investment Institutions (FII) regime;
- and the Exempt Investment Institutions (EII) regime.
Out of these, only hedge funds organized as cooperatives will be subject to regular taxation.
If you are interested in setting up a Dutch business in order to create a hedge fund, you can rely on our local agents.
Share capital requirements for Dutch investment funds
It is good to know that certain types of investment funds are subject to various share capital requirements based on whether the fund manager is licensed or not and if the fund is supervised by the Financial Market Authority and by the Dutch National Bank. The minimum share capital requirements for open-ended and closed-ended retail funds is 125,000 euros if the assets under management are below 250 million euros and 225,000 euros if the assets are worth more than 250,000 million euros. Also, participants are required to contribute with at least 100,000 euros to the fund.
Legal structures for investment funds in the Netherlands
An entrepreneur who wants to set up an investment fund in the Netherlands has the possibility to choose among a few legal structures:
- private limited liability company (besloten vennootschap met beperkte aansprakelijkheid – BV) and public limited company (naamloze vennootschap – NV) – both corporate entities. The NV can be listed on the local stock exchange.
- limited partnership (commanditaire vennootschap – CV) and fund for joint account (fonds voor gemene rekening – FGR) – both non-corporate entities. The CV is chosen especially by investors interested in the real estate and private companies and the latter is preferred by those who want to invest in assets that are daily traded. The fund for joint account is an agreement between the investors, the manager and the owner, that can be a foundation that was created for this purpose.
We invite you to read about the advantages of Dutch investment funds in the scheme below:
Corporate and non-corporate structures for setting up Dutch funds
As mentioned above, no matter the type of investment fund a professional investor decides to open in the Netherlands, one can choose between the corporate forms which can be registered as a BV or NV and the cooperative, and the non-corporate forms which can take the form of a fund for joint account (one of the most popular types of Dutch investment funds) and the limited partnership (CV).
The most important aspect to consider when choosing the investment vehicle is that it will dictate the tax regulations imposed to the respective fund.
Here are a few aspects to consider when choosing the type of Dutch investment fund and vehicle used to create it:
- in most cases, the BV and BV are chosen in an equal manner because they offer similar advantages and the possibility to issue shares;
- the NV can also be used to create an investment company with variable capital (ICVC) which is popular among European investors;
- the ICVC can be used to create umbrella funds which holds various sub-funds that issue a diversity of shares;
- the cooperative is similar to the limited partnership, as there are no share capital requirements related to establishing one;
- the cooperative can also impose a maximum liability limit to the participants in the Dutch fund;
- the limited partnership is another business form popular at a European level and can be set up through a notarial deed;
- the fund for joint account is the most flexible business form which can be employed for the creation of an investment fund.
Returning to the taxation of Dutch investments funds, it is good to know that these can be set up as transparent or non-transparent (opaque) funds.
If you want to open an investment fund and need information about the regulations applicable, our company registration consultants in the Netherlands are at your disposal with complete support in this sense.
We also invite you to watch our video on the main types of Dutch investment funds:
Local regulations for investment funds
An investment fund that was set up in the Netherlands is allowed to invest in any type of financial instruments, all over the world, with no restrictions. The investors are protected by the Authority for the Financial Markets (AFM) that will ask for certain guarantees, such as the possibility of the investor to ask for redemption and to obtain it very soon.
Managers of Dutch investment funds
If a Dutch AIFM meets the conditions set down in Dutch law implementing the Alternative Investment Fund Managers Directive (2011/61/EC, or AIFMD), the AFM will issue the AIFM a license upon application.
The license criteria cover a variety of requirements, such as:
- the board members’ qualifications and dependability;
- the AIFM’s management and control structure;
- the handling of any conflicts of interest;
- the selection of a depositary;
- and the minimum amount of own money of the manager.
During the application process, the AFM may ask for additional paperwork or information, in which case the 26-week evaluation period will be postponed. This is why, if you decide on investment funds in the Netherlands, it is advised to seek professional advice.
If the requirements outlined in Article 30a of the AIFMD, as implemented in the Netherlands, are satisfied, a Dutch licensed AIFM may also pre-market an AIF to professional investors in the Netherlands or another EU member state.
In accordance with Article 33 of the AIFMD on passporting rights, it is allowed for an EU AIFM having an AIFMD license in another EU member state to manage a Dutch AIF.
A non-EU AIFM must abide by the Dutch implementation of Article 42 of the AIFMD’s national private placement system in order to manage a Dutch AIF (NPPR).
What to consider when opening a fund in the Netherlands
The procedure for establishing a Dutch investment fund will largely depend on some unique facts and circumstances. Generally speaking, fund managers begin by talking with their professional advisers about the investment fund’s form and terms and conditions. The fund manager will choose the fund structure (mainly based on the characteristics of the potential investors, the fund’s investment strategy, and any relevant tax concerns) and will create a sheet outlining the key terms and conditions of the investment fund.
Then, the process of registration has two parts:
- the first one in which the legal entity for the fund is incorporated with the Trade Register;
- the licensing phase.
If you are interested in starting a business in the Netherlands to use it as a vehicle for an investment fund, you can rely on our consultants.
How to open a fund in the Netherlands
According to Dutch legislation, getting authorization to create a fund is the first and most important stage in the entire process. For this reason, one should apply to the Dutch Authority for Financial Markets (AFM). The application must include a series of supporting documents, which will be verified and reviewed by the AFM.
A test of the applicant’s character and reliability is included in the application for the fund’s Management Board and Supervisory Board members.
The application must have the following documents attached:
- a notification form of the fund management business;
- an application for each member of the management board and each member of the supervisory board to have their appropriateness and reliability assessed.
If you are interested in setting up a company in the Netherlands with the purpose of creating the investment fund’s management structure, you can rely on our local specialists.
Taxation of investment funds in the Netherlands
Compared to other jurisdictions, including European known countries, the Netherlands does not impose stamp duties or taxes on the capital contributions in the chosen investment vehicles. Also, there are no annual subscription, net worth or withholding taxes which makes the Netherlands quite appealing for creating various types of funds.
There are three tax regimes applicable to Dutch investment funds and these are:
- the regular regime which implies the levy of the corporate tax and withholding dividend tax;
- the Fiscal Investment Institution (FII) regime;
- the Exempt Investment Institution (EII) regime.
The tax regime applicable to investment funds will depend on the type of structure chosen for the investment vehicle. From this point of view, corporate forms can be subject to the following regimes:
- the BV can be subject to the regular or the FII regimes;
- the NV can be subject to all 3 regimes;
- the cooperative will be taxed under the regular regime only;
- the CV can be subject to the regular regime if it is set up as an opaque investment fund;
- the FGR can be subject to all 3 regimes if it is set up an opaque fund.
If you need additional information on the taxation of investment funds, our agents can advise you. We can also help you open a company in the Netherlands if you plan on setting up a business in a different field of activity.
Most popular types of funds in the Netherlands
Those who want to open a fund in the Netherlands have plenty of reasons to choose this jurisdiction. For example, investment managers have various choices when establishing a fund. Alternative investment funds (AIFs) are usually ranked as a preferred fund structure for overseas investors. There are several exceptions to the rule that AIFs may need a license, for instance, if the value of the assets under management is less than EUR 100 million. For private equity purposes, the limited partnership is often the choice of investors. Generally speaking, real estate funds and hedge funds operate under separate structures under FGRs. This is an agreement in writing between investors and the fund manager. FGRs are not subject to Dutch corporate law; however, the fund management and investors decide on the specifics of governance.
If you need guidance in choosing a legal form for the fund, our Dutch company formation specialists can provide tailored guidance.
Marketing requirements for Dutch investment funds
One of the most important aspects taken into consideration by those who decide to open a fund in the Netherlands is its marketing strategies.
The AIFM is required to keep an asset under management (AUM) portfolio of AIFs that do not exceed certain restrictions, whether managing autonomously or through an entity under joint management or control. The following AUM thresholds must be respected in accordance with the AIFM Directive:
- up to EUR 500 million, provided that all AIFs under the AIFM’s supervision are unleveraged and have limited redemption rights for a minimum of 5 years following the date of the original investment;
- a maximum of EUR 100 million.
Furthermore, the AIFM cannot market interests in each managed AIF by a set of rules known as the Placement Restrictions, which imply:
- these interests are limited to professional investors only;
- to fewer than 150 people;
- when each investor contributes a minimum of EUR 100,000.
Each investor must provide a minimum initial capital commitment of EUR 100,000, exclusive of any additional fees; the first sum deducted from each investor’s commitment must equal or surpass EUR 100,000. Also, the pledged capital cannot ever fall below EUR 100,000 at any point.
An AIFM must formally register both itself and any AIFs it manages or plans to market if it meets both the AUM and Placement requirements.
If you need more information on the rules related to opening an investment fund, you can send your questions to our company registration advisors in the Netherlands.
Investment funds statistics in the Netherlands
According to recent statistics, 2022 was a good year for the Dutch investment fund industry, as it can be read below:
- – the total value of assets held by investment funds surpassed EUR 1 billion;
- – equity funds held assets with the largest value, totaling to EUR 235.081 million in the 4th quarter of 2022;
- – bond funds ranked second by value of assets with EUR 105.434 million for the same period of time;
- – in the first quarter of 2023, the value of assets held by equity funds reached EUR 250.653 million.
There is also an advantageous taxation system for FGR and our specialists in company formation in the Netherlands will offer you details. You can contact us for information related to investment funds in Holland and we will help you incorporate the entity that best suits your business objectives.