Investments and Funds

Collective Investment Schemes are more frequently known as ‘investment funds’, ‘mutual funds’ or simply ‘funds’. We invest in assets, such as bonds, equities, or cash. The collective assets owned by the fund are called a portfolio, and we are managed by a professional fund manager.

Under section 2:65 of the Financial Supervision Act (Wet op het financieel toezicht / Wft) companies that manage collective investment schemes are required to have a license. The Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) is the body that issues licenses to companies to act as management companies of collective investment schemes.

Following the Alternative Investment Fund Managers Directive, a manager requires a registration in certain situations in order to manage an AIFM and/or to offer units or shares in the Netherlands to investors.

Features and requirements for AIFM in Netherlands

• The process involves submission of a template application form plus numerous supporting documents to the Netherlands Authority for Financial Markets (“AFM”) for review. Part of the application is a test of suitability and reliability of the board members and supervisory board members of the AIFM
• Additional forms must be provided along with the application form: – Notification form AIFs, Notification form AIFM depositary and Application form for suitability and reliability testing for each (supervisory) board member
• The AFM can decide within 13 weeks, however, the AFM may use up to 26 weeks in which case the AFM will inform the applicant thereof. As such, the practical timetable is around 8 months (including preparation time)
• The AFM charges an application fee of €5,500, and additional fees for the suitability and reliability tests.
• Initial capital of €125,000 required, unless an AIF is set up as an investment entity with legal personality without a separate AIFM in which case initial capital of €300,000 is required. Additional own funds required if the AIFM does not have a separate professional indemnity insurance
• In addition to AIFMD depositary, a ‘legal owner’ must be appointed if AIFM sets up AIFs without legal personality to hold the assets
• Four eyes principle is applied. AIFM should have at least two day-to-day policymakers
• AIFM with an official seat in the Netherlands, head office must be in the Netherlands
• The standard corporate income tax rate on income is 20% (for profits up to €200,000) / 25% (for profits in excess of €200,000)
• No withholding tax on interest and royalty payments. Standard Dutch dividend withholding tax rate on outgoing dividends is 15%, however, a reduction or exemption may be applicable on the basis of EU Parent-Subsidiary Directive, a double tax treaty or by the use of a Dutch “cooperative”. So tax-free repatriation to US, UK and a wide range of other jurisdictions is generally available
• Income from employment is subject to income tax at progressive rates up to 52%. However, certain qualifying foreign employees that move to the Netherlands may be able to apply for a “30% ruling”, which may result in an effective maximum income tax rate of 36.4% (instead of 52%)
• An AIFM must have legal personality under Dutch corporate law (typically a Dutch private limited company is incorporated). Incorporation requires the assistance of a Dutch civil law notary
• The entity will need to be registered with the Dutch Chamber of Commerce.

Benefits of AIFM in Netherlands

• Broad domestic and treaty dividend withholding tax exemptions
• Limited quantitative requirements on corporate governance
• Data protection legislation is very similar to the UK in terms of practical application

For more information, please contact Neptune Fiduciaries at info@neptunecorporate.com or sales@neptunecorporate.com.