Fund jurisdictions in five charts: the Netherlands

The country has one big advantage over other jurisdictions: a fund structured as a limited partnership is tax exempt.

Private equity firms escaping the UK and seeking to domicile in the Netherlands need to hurry, as the recommended deadline has passed by more than seven weeks.

In anticipation of a surge in applications, the Netherlands’ main regulatory body, Authority for the Financial Markets (Autoriteit Financiele Markten, or AFM), said on its website that firms that applied no later than July 1 could have their applications processed before March 29, 2019 – the planned date of the UK’s secession from the EU. The AFM has a dedicated webpage for this process.

Still, there is no guarantee that the application will be completed in that suggested nine-month period.

“The AFM strives to process permit applications carefully and as quickly as possible,” Michiel Gosens, a spokesman for AFM, told pfm in an email. “This depends on many factors such as the quality of the application, the reaction speed of the applicant and the complexity of the application.”

Dutch law stipulates that the maximum length of time to process a license is 26 weeks, but that wouldn’t apply if an applicant had missing information and needs to respond to queries to the AFM and the Dutch central bank (De Nederlandsche Bank, or DNB), which monitors compliance.

The Netherlands has one big advantage over other jurisdictions: a fund structured as a limited partnership (CV) is tax exempt. There are also additional incentives at the management or company level, such as no value-added tax for management company services, according to Felix Zwart, who oversees research, tax and regulatory affairs at Nederlandse Vereniging van Participatiemaatschappijen (NVP) – the association that represents private equity firms.

Within the EU, the Netherlands ranked after Luxembourg in terms of taxation on incentives to invest but was the most competitive overall, according to the World Economic Forum.

One fund administrator said that while the focus of his clients has been on Luxembourg and Ireland, the Netherlands is one jurisdiction to pay attention to. Alter Domus and SGG Group are among the fund administrators with offices in Amsterdam – the Dutch capital that is home to many multinational financial services firms. More than 200,000 people are employed in the financial industry.

“Private equity and venture capital fund managers come in many shapes and sizes,” NVP’s Zwart said. “The regulator is aware of that and lets fund managers explain their case and propose their specific solutions to meet the requirements when applying for an AIFMD or EuVECA [for venture capital] license. They have put effort into attracting talent from the market, which is a great help.”