Taxation of UCITS in the Netherlands

Professional investors can set up several types of funds in the Netherlands, among which UCITS are very popular. UCITS comes from Undertakings for Collective Investments in Transferable Securities and is a type of investment fund which even if created in the Netherlands can operate in the entire European Union.

In order to open a UCITS fund in the Netherlands, investors must comply with a few requirements and must pay attention to the tax rules applied to investment funds. Our Dutch company formation agents explain how UCITS funds are taxed in the Netherlands.

The tax treatment applied to Dutch UCITS funds

The taxation of UCTIS funds in the Netherlands depends on whether the fund in an open-ended or closed-ended structure.

In the case of open-ended UCITS funds, there are two taxation regimes which apply:

• - a special corporate tax rate;
• - an exemption from the corporate tax.

The special corporate tax rate applicable to Dutch UCITS funds is 0% and is available under the following conditions:

• - if the fund distributes the profits in maximum 8 months after the financial years closes;
• - the fund has invested only in passives before the profits are distributed;
• - the fund is registered under a corporate structure in the Netherlands: a BV or a NV;
• - the shareholders and the directors of the fund are also subject to special licensing requirements.

The other requisites applied to UCITS funds in order to benefits from the 0% corporate tax rate can be explained by our local consultants.

With respect to the exemption from the corporate tax, this applies to UCITS funds set up as non-legal entities, such as partnerships and FGRs (funds for joint account).

UCITS funds under Dutch double tax treaties

We mentioned earlier that UCITS funds can be marketed in all EU states through passporting right. This means that they will benefit from the Netherlands’ double tax treaties under which an exemption from the withholding tax apply to their local and foreign shareholders. In all other cases, a 15% withholding tax applies on the distribution of dividends derived from UCITS funds registered in the Netherlands.

If you are interested in setting up a UCITS fund and need more information on its taxation, please feel free to contact our company registration advisors in the Netherlands.