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Types of Investment Funds in the Netherlands

Updated on Friday 09th September 2022

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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.
 
 
 Quick Facts  
Applicable legislation

- 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

- qualified/professional,

- unqualified investors

Fund manager requirements

Fund managers must comply with the Alternative Investment Fund Managers (AIFM) Directive

Supervising authorities

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.

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

 
Out of all investment funds in the Netherlands, AIFs are among the preferred of 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 account, 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.
 

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:
 
 
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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:
 
  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.
 
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).
 

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.
 

Investment funds statistics in the Netherlands

 
According to recent statistics, between the 4th quarter of 2015 and the 2nd quarter of 2018:
 
  • - 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 2nd quarter of 2017;
  • - the largest number of AIFs of 1,748 was registered in the 2nd 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. 
 

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