The Dutch government has unveiled two legislative proposals that follow a public consultation earlier this year, aimed at amending the country's tax-exempt investment institution (VBI), fiscal investment institution (FBI), and fund for a joint account (FGR) regime.
The proposals, which were part of a public consultation in March, have been officially released on Dutch Budget Day, September 19, 2023.
1. FBI Direct Real Estate Investment Restriction: Effective January 1, 2025, FBIs will no longer be allowed to make direct investments in Dutch real estate. However, they can still make indirect investments through regularly taxed companies. This change comes as a response to feedback from the consultation. Notably, FBIs can still directly invest in real estate located outside the Netherlands.
2. FGR Definition Changes: The definition of an FGR will be altered so that only FGRs regulated under Dutch financial supervision legislation (the WFT) with publicly traded participations will be considered opaque for Dutch tax purposes.
3. VBI Regime Eligibility: The proposed changes for the VBI regime align with those for the FGR. Only entities regulated under the WFT will qualify for the VBI regime.
4. Effective Date: Contrary to the consultation document, the changes related to FGRs and VBIs are expected to come into effect on January 1, 2025, instead of January 1, 2024.
Preferential Treatment of FGRs Over FBIs?
These investment institutions are currently popular among foreign investors, high-net-worth individuals, and families for structuring their investments. The new rules aim to align the actual use of these investment institutions with their original purpose, which is joint investments by a (large) group of investors. Additionally, the changes seek to regain taxing rights on Dutch real estate investments made by foreign investors.
If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact firstname.lastname@example.org or your usual A.C.T. contact.