A Dutch resident Life Sciences company, just like any other company that qualifies as SFI (as defined below) could be confronted with the obligations following from the Financial Foreign Relations 1994 (Wet financiële betrekkingen buitenland 1994, Financial Foreign Relations Act). We have briefly described the main considerations below.
Definition of SFI
Companies that (i) qualify as Special Financial Institutions (Bijzondere Financiële Instellingen, SFI) under the Financial Foreign Relations Act, and (ii) are appointed as a reporter (Reporter) by Dutch Central Bank (De Nederlandsche Bank, DCB), are obliged to report as such to DCB.
A SFI is an enterprise or institution, regardless of its legal form, which is a Dutch resident in which non-Dutch residents, directly or indirectly through equity, or by any other means, participate or exercise influence, with the purpose of or to a large extent focus on, solely or acting together with Dutch group companies:
- primarily holding foreign assets and liabilities,
- funneling through turnover consisting of foreign acquired royalty- and licensing proceeds to foreign group undertakings, and/or
- generating turnover and costs primarily originating from re-invoicing to and from foreign group entities.
DCB interprets the definition of SFI broadly. A Dutch resident Life Sciences company could qualify as SFI under any of the items above.
Pursuant to the Financial Foreign Relations Act, DCB is responsible for the compilation of the balance of payments for the Netherlands. In accordance with the Financial Foreign Relations Act, DCB periodically collects data relating to (inter alia) cross border transactions from entities selected by DCB. According to the Financial Foreign Relations Act, DCB has issued ‘Reporting Instructions Balance of Payments Reports 2003’ (Reporting Instructions).
Pursuant to the Reporting Instructions, SFI’s have to notify DCB in writing, within three weeks after their incorporation, in order to enable DCB to assess whether or not the SFI should be appointed as a Reporter.
In accordance with unpublished policy of DCB, a SFI with a balance sheet that exceeds EUR 300 million is likely to be appointed by DCB as a Reporter. If a SFI is appointed as a Reporter, the Reporter has to inform DCB of (inter alia) its name and correspondence address, visitors address, name, correspondence address and visitors address of the representative of the Reporter (if applicable) and the last month of its financial year. A Reporter has to inform DCB forthwith of any changes therein.
If a Reporter fails to report to DCB, the administrative penalty according to the Decree on Administrative Penalties for the Financial Services Sector may lead to an administrative fine of a basis maximum amount of EUR 10,000. Such decision to impose a fine will in principle be made public on the website of DCB.