Dutch trust register entered into force
On 1 November 2022, the Dutch trust register (“TR”) entered into force. The TR is a publicly accessible register containing personal information on UBOs of trusts and similar legal arrangements (like the Dutch mutual fund for collective investments, ‘fonds voor gemene rekening’/‘FGR’). This legislation applies if the trustee (i) is a Dutch tax resident or (ii) a tax resident outside the EU while it acquires Dutch real estate or maintains business relations in the Netherlands on behalf of the trust (or a similar legal arrangement).
All ultimate individual beneficiaries – regardless of their (economic) interest – are considered UBOs for the purposed of the TR. Thus, settlors, trustees, beneficiaries (and protectors, if applicable) can be considered UBOs.
Trustees or persons holding a similar position must register the information in the TR. The information will be administered by the Dutch Chamber of Commerce and the registration will be communicated to the UBO automatically. Within 3 months after entering into force, UBOs of trusts and similar legal arrangements must be registered. This means that this obligation must be fulfilled before 1 February 2023.
Postponement abolishment Dutch FBI regime for direct real estate investments to 2025
As indicated in our previous Quarterly Update (Q3 2022), the Dutch Ministry of Finance announced to abolish the Dutch FBI regime for direct real estate investments with effect from 1 January 2024. Because of this abolishment, profits of FBIs from directly held Dutch real estate will become subject to Dutch corporate tax (at a standard corporate tax rate of 25.8%). As such, the FBI regime will effectively be abolished for direct real estate investments.
On 9 December 2022, however, the Dutch government postponed the abolishment to 1 January 2025. This should give taxpayers sufficient time to anticipate the consequences of this measure. In addition, the postponement of the abolishment is related to the government’s decision to introduce additional measures to facilitate the restructuring by FBIs. For example, certain restructuring activities could trigger Dutch real estate transfer tax (“RETT”). In this context, a conditional RETT exemption during 2024 should become effective for restructuring activities directly related to the abovementioned real estate measure.
Dutch Pillar Two draft legislation for consultation
On 24 October 2022, the Netherlands legislator shared draft legislation for public consultation to implement Pillar Two as of 1 January 2024. These rules introduce a minimum corporate taxation of 15% for multinational enterprises with consolidated group revenues exceeding EUR 750 million. The following will be relevant for funds.
The Netherlands published – in line with the EU directive – a list of entities that are out of the scope of these Pillar Two rules. Such excluded entities include real estate investment vehicles and investment funds that are ultimate parent entities of multinational enterprises and meet certain other conditions. Also, entities held by the abovementioned excluded entities are excluded, but only if (i) an interest of at least 95% in such entity is held and such entity almost entirely serves holding/investment purposes of that excluded entity or (ii) an interest of at least 85% in such entity is held and almost all income of such entity consists of dividends, capital gains (or losses) which are excluded from the calculation of the qualifying income.
It is expected that most funds (i.e. their holding companies) will be able to benefit from the provided exemptions, but this should be assessed on a case-by-case basis as there are examples that do not fall under the abovementioned exemptions.
AFM implements PRIIPs KID requirements
With effect from 1 January 2023, managers of AIFs or UCITS which offer units to retail investors are required to publish a Key information Document ("KID", Essentiële‑informatiedocument) and cannot benefit anymore from the transitional arrangements which allowed managers of AIFs or UCITS which offer units to retail investors to draw up a key investor information document (essentiële beleggingsinformatie) The KID must be drawn up in accordance with the PRIIPs Regulation.
AFM calls on non-EU fund managers to submit AIFMD reports as of 2023
On 1 January 2023, the reporting obligation for third-country AIFMs and AIFs started to apply. Non-EU AIFMs and AIFs are required to report to the Dutch Authority for Financial Markets (Autoriteit Financiële Markten, the "AFM") on their funds and management activities.
AFM reports on SFDR compliance AIFMs
On 10 November 2022, the AFM published the results of an investigation it conducted on the status of compliance of financial undertakings with the SFDR and the related Taxonomy Regulation. Three main conclusions are the result of the AFM’s investigation on SFDR compliance by UCITS managers and AIFMs:
Clearer information on the integration of sustainability risks in policies of managers
Information on the integration of sustainability risks in the investment decision process of managers should be described in specific rather than in general terms. This also applies to the remuneration policies of managers.
Fund classification changed
The AFM established that, as a result of the publication of the RTS under SFDR, the fund classification of many Article 9 funds (with sustainable investment as their objective) changed to Article 8.
Lack of data for transparency requirements in the Taxonomy Regulation
Although managers do publish the required disclosures under the Taxonomy Regulation, almost all funds disclosed that 0% of their investments are in line with the Taxonomy criteria. The main reason for this is that there is a lack of reliable data to establish whether these criteria have been met. The AFM states that it acknowledges that such quantitative data is not yet available and that it will take this into account as part of its supervisory task.