Introduction

Six years after its introduction, the operation of the Dutch Act on Trust Companies Supervision (the Act) has been evaluated. A Dutch trust or company services provider typically renders administrative, domiciliation and/or managerial services to a broad range of (international) clients who choose to use a Dutch entity in their corporate structure for tax or other purposes.

The Act aims to safeguard the integrity of (part of) the Dutch financial system by regulating the Dutch trust sector and incorporating recommendations by the Financial Action Task Force on money laundering (FATF) and OECD. As a result of the Act, Dutch trust companies may only operate under a licence issued by the Dutch Central Bank and are obliged to comply with strict regulations. Before accepting a client and therewith providing such a client access to the Dutch financial system, a trust company must perform “knowing your customer” (KYC) checks, by way of identifying the ultimate beneficial owner (UBO) of the structure, the source and allocation of funding and establish that the structure as such is not contra legem. Consequently, Dutch trust companies perform the role of gatekeeper and as such increase the integrity of the Dutch financial system.

Outcome of evaluation

The outcome of the evaluation is encouraging. Since its introduction no licence has been withdrawn under the Act (although in some instances administrative fines have been imposed) and the trust sector in general performs very well when it comes to complying with the obligations/ regulations laid down in the Act. The success of the Dutch trust sector is to a large extent based on the excellent financial and legal infrastructure, a beneficial tax regime and the number of double tax treaties concluded by the Netherlands. The positive outcome of this evaluation will likely further strengthen the reputation of the Netherlands as country of choice when it comes to establishing a safe, solid and tax efficient international holding or financing structure.