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Earlier we have posted a blog about how to invest in the Netherlands. In this blog we will discus a few legal entities that might be helpful if you want to start a Dutch investment fund. There are few options:
- Dutch limited company
- Dutch investment partnership
- VBI (tax exempt investment vehicle)
- FBI (fiscal investment vehicle)
The Dutch limited company
This is the most straightforward set-up for an investment fund. Especially for venture capital, this is often an attractive option from a tax point of few, as dividends and capital gains can typically be received untaxed because of the participations exemption. Investment decisions are taken by the board of directors, which is appointed by the shareholders/investors. The B.V. is the legal owner of the investments.
The Dutch investment partnership
Real estate and portfolio investments are often most tax-efficiently held without the interference of a legal entity like a B.V.. Through a contract between investors, a partnership can be formed which is ‘transparent’, which means dividends and capital gains, but also rental income from real estate, are tax at a personal level, which can be very beneficial in the Dutch personal income tax system. Typically, a custodian and a manager are appointed to run the partnership efficiently.
The VBI (tax exempt investment vehicle)
This entity is exempt from corporate tax and dividend tax. It does need a permit and can only invest in financial products. It cannot directly invest in real estate. Profits do not need to be distributed. This way it can re-invest its proceeds tax-efficiently. A VBI needs to have at least two shareholder at all times.
The FBI (fiscal investment vehicle)
The FBI is a status awarded to a limited company. It is not technically tax exempt, but is taxed at a 0% rate. Main condition is that profits are distributed to shareholder/partners within eight months after the end of the book year. Depending on the kind of investment, these investors/partners should be individuals or legal entities to keep the set-up as tax efficient as possible.
Want to know which option would suit your situation best? Feel free to get in touch with one of our advisors.
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