Types of Investment Funds in the Netherlands

 

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.

 

 

 

 

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. 

 

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 Alternative Investment Fund Managers Directive (AIFMD) related to managers of the alternative investment funds (AIF). 

 

Alternative investment funds (AIFs) in the Netherlands

Retail funds in the Netherlands

 

 

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.

 

 

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

1.  in most cases, the BV and BV are chosen in an equal manner because they offer similar advantages and the possibility to issue shares;
2. the NV can also be used to create an investment company with variable capital (ICVC) which is popular among European investors;
3. the ICVC can be used to create umbrella funds which holds various sub-funds that issue a diversity of shares;
4. the cooperative is similar to the limited partnership, as there are no share capital requirements related to establishing one;
5. the cooperative can also impose a maximum liability limit to the participants in the Dutch fund;
6. the limited partnership is another business form popular at a European level and can be set up through a notarial deed;
7. the fund for joint account is the most flexible business form which can be employed for the creation of an investment fund.

 

We also invite you to watch our video on the main types of Dutch 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

 

• - 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.

Taxation of investment funds in the Netherlands

• - 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 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.

Investment funds statistics in the Netherlands

• - the number of UCITS funds increased from 95 to 100;
• - the number of AIF funds decreased from 1,708 to 1,648;
• - during this timeframe, the largest number of UCITS of 106 was registered in the 2^nd quarter of 2017;
• - the largest number of AIFs of 1,748 was registered in the 2^nd quarter of 2017;
• - at the end of 2021, there were 82 UCITS investment funds in the Netherlands;
• - by comparison, the number of AIFs was 1,428 at end of the same year.

 

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.