Investors in the Netherlands can open several types of funds or use the available types of legal entities in order to form their investment portfolio. Hedge funds and retail funds in the Netherlands are regulated through a special set of laws.
Our lawyers in the Netherlands can help you with detailed information about the regulatory regime for investment funds and the associated laws.
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Retail funds in the Netherlands can be open-ended or closed-ended. The open ones can be divided into investment companies (that have legal personality) and investment funds (without legal personality). The investment company does not have to be managed through a third party, like the investment fund.
The Netherlands Authority for the Financial Markets (AFM) is the regulatory body for Dutch retail funds. Other supervisory authorities ensure the transparency of the financial processes and the duty of care towards the customers. The Dutch Central Bank provides prudential supervision in this field.
The same authorities that govern open-ended retail funds also govern closed-ended ones and hedge funds in the Netherlands. In the case of hedge funds, the AFM offers specific rules for risk control, valuation, pricing and customer requirements. A special set of rules issued by the AFM concerns market abuse through unlawful practices like banning insider trading or market manipulation.
The Netherlands is a preferred business location not only because of its pro-business policies and location in Europe but also because of its regulatory and tax regime. The taxation of investment funds is beneficial for the investor: there are no stamp duties on capital contributions made in an investment vehicle.
The tax treatment of a Duct investment fund can be enforced in one of three ways:
– the regular tax and dividend withholding tax regime;
– the Fiscal Investment Institution (FII) regime;
– the Exempt Investment Institution (EII) regime.
Legal entities taxed under the FII regime are not subject to the Dutch corporate tax. certain eligibility criteria apply to this taxation regime. The EII regime offers exemption from the corporate income tax and the dividend withholding tax. an investment vehicle taxed under the EII regime must have a specific business form, at least two shareholders and also meet several other criteria.
One of the tax specialists at our Dutch law firm can give you more information about these taxation regimes for investment funds in the country.
Our law firm in the Netherlands offers complete investment counseling and legal advice for local and foreign investors. You can contact us if you need more information about our services.