Subject to certain requirements, a NV, a private limited liability company (besloten vennootschap, BV) and an FGR tax resident in the Netherlands may apply the FBI regime. Investment companies that qualify as FBI are subject to corporate income tax at the rate of zero per cent.


Currently, several strict and rather complex requirements must be met to qualify as FBI. These requirements include the way in which the FBI’s investments are financed, the distribution of the investment returns, and the ownership of shares in the FBI.

In order to qualify as FBI, amongst others things, the following requirements must be met on an ongoing basis throughout the relevant fiscal year:

  • the statutory as well as actual activities of the investment fund should consist of collective passive investment activities;
  • investments in real estate may only be debt financed to a maximum of 60 per cent of the book value of the real estate, whereas for other investments this limit is 20 per cent of the book value of such investments;
  • if the investment fund is listed on a qualifying Dutch stock exchange, less than 45 per cent of the share capital may be held by a corporate entity or a group of affiliated corporate entities subject to corporate income tax, unless such corporate entity is a listed investment fund itself (alternatively the licence requirement may be met, see below);
  • if the investment fund is not listed on a qualifying Dutch stock exchange, at least 75 per cent of the shares must be owned, directly or indirectly, by (i) individuals, or (ii) corporate entities not subject to corporate income tax, and/or (iii) listed companies that qualify as investment funds for Dutch tax purposes (alternatively the licence requirement may be met, see below);
  • the profits (except for capital gains) must be distributed annually within eight months of the end of the book year;
  • the total interest held by resident individuals through non-resident entities must be less than 25 per cent;
  • any single non-resident investor (corporate entity or mutual fund) may not hold a direct interest of 25 per cent or more in the investment fund. The total (indirect) interest held by non-residents is, however, unlimited (this requirement will be abolished, see below);
  • if the investment fund is not listed on a qualifying Dutch stock exchange, individuals should not hold a substantial interest in the investment fund (alternatively the licence requirement may be met, see below); and
  • certain requirements in respect of the board of directors and supervisory board should be met.

The bill introduces important amendments to the existing FBI regime. Currently, only a NV, BV or FGR can claim the application of the FBI regime. According to the bill the amended FBI regime can also apply to comparable entities established under the laws of the Netherlands Antilles, an EU member state, or a state with which the Netherlands has entered into a tax treaty that provides for an article on non-discrimination.

Furthermore, the existing investor requirements will be relaxed. As an alternative to the requirement of a listing on the Amsterdam Stock Exchange (listing requirement), the licence requirement is introduced: if the FBI or its manager has obtained a licence under the AFS (or an exemption from the obligation to obtain such licence) a listing is no longer required. Furthermore, the limitation that no foreign investor may hold an interest of 25 per cent or more will be abolished.

Dividend withholding tax

An investment fund subject to the FBI regime is required to withhold 15 per cent dividend tax in respect of annual distributions to its investors, unless the standard rate is reduced under an applicable tax treaty or the EU Parent/Subsidiary Directive. An EU investor qualifying under the EU Parent/Subsidiary Directive and holding 5 per cent or more of the shares in an FBI should therefore be able to receive dividends from an FBI without dividend withholding tax being levied in the Netherlands.

Real estate investments

Currently, investing in real estate may qualify under the FBI regime if this investment qualifies as a passive investment. Property development activities are generally considered to be beyond the scope of purely passive investment activities and would therefore generally not qualify for the application of the FBI regime. Under the new bill, an FBI may engage in property development activities, provided that: (i) investments in property development are structured via a separate taxable property development subsidiary, and (ii) the development activities of the FBI itself increase the value of the (re-) developed property by less than 30% (this value is determined on the basis of the Dutch Valuation of Immovable Property Act (Wet waardering onroerende zaken, WOZ)). The State Secretary has indicated that the 30 per cent threshold should be considered a safe haven. This publication is written as a general guide only. It is not intended to contain definitive legal advice which should be sought as appropriate in relation to a particular matter. © Norton Rose 2007 Extracts may be copied provided their source is acknowledged.