The Dutch government has published a draft bill and explanatory notes proposing changes to the tax definition of the “fonds voor gemene rekening” (FGR) and introducing an optional opt-out regime from corporate income tax for certain funds.

The proposal follows the earlier Wet aanpassing fonds voor gemene rekening en vrijgestelde beleggingsinstelling (Wet Fgr) and Wet fiscaal kwalificatiebeleid rechtsvormen (Wet Fkr) and aims to resolve several practical issues identified in the market and by the Dutch Tax Administration.

Under the current rules, many investment funds that meet the FGR criteria are treated as separate corporate income taxpayers as of 1 January 2025. Market participants have raised concerns about, among other things, the qualification of (foreign) partnerships as FGRs and the complex reference in the FGR definition to financial-supervisory concepts in the Dutch Financial Supervision Act (Wft).

Key elements of the proposal

• Revised FGR definition
  The FGR definition in the Corporate Income Tax Act 1969 would be restructured and amended. A fund will qualify as an FGR only if it qualifies as an “investment institution” (beleggingsinstelling) or UCITS (icbe) within the meaning of the Wft, which in turn refers to the AIFM and UCITS directives. This ensures that family-type private investment vehicles (family funds) that merely invest private wealth and do not raise external capital are not treated as FGRs. At the same time, foreign partnerships with legal personality, such as a French Société Civile de Placement Immobilier, can qualify as FGR if the other conditions are met.

• New opt-out regime (afmeldregeling)
  Funds that technically meet the FGR definition can, under conditions, opt not to be treated as an FGR and thus be treated as transparent for Dutch tax purposes. The fund’s assets, liabilities, income and expenses are then attributed to the underlying investors instead of being taxed at fund level.

  The opt-out is subject to three main conditions:

  1. A maximum of 20 ultimate investors (“toerekeningsquotum”) during the life of the fund, to target more closed-end, investor‑driven structures and avoid extensive administrative burdens in open‑end retail‑type funds.
  2. A robust information obligation: the fund must provide the Dutch tax authorities with all data required to assess and levy tax at investor level (including name, address, residence and BSN/RSIN), both at the time of the opt‑out request and upon changes in the investor base.
  3. One‑time choice: the opt‑out can only be applied once per fund. If the opt‑out ends (e.g. through breach of conditions or a later request to be treated as FGR again), a new opt‑out is not possible.

  Where the opt‑out is used, the fund is treated as a tax-transparent fund for purposes of Dutch corporate income tax, dividend withholding tax and conditional withholding tax.

• Ranking rule to avoid double qualification
  A ranking rule is introduced to ensure that entities already taxable as a corporation (such as an NV or BV, or comparable foreign entities) cannot at the same time be considered an FGR or a transparent fund. If a body is (or would be) subject to Dutch corporate income tax based on its legal form, it cannot additionally qualify as an FGR or transparent fund.

• Transitional opt‑out for existing FGRs
  Existing FGRs as at 31 December of the year preceding entry into force ([year t‑1]) can also opt for transparency under similar conditions, provided the request is filed ultimately 31 December [year t]. If granted, the fund will be treated as transparent from the start of the first financial year beginning on or after 1 January [year t].

Timing and next steps

The draft law is open for public consultation up to 2 January 2027. In this context, the Dutch government explicitly notes that this is a consultation draft and that no rights can be derived from it. Any legislation is expected to enter into force no earlier than 1 January 2027. After the consultation, the government will decide whether and how to proceed with a formal bill, potentially with additional flanking measures in the income tax, dividend withholding tax and withholding tax acts.