Many investment managers view the Netherlands as an attractive jurisdiction for opening a fund, and it’s easy to see why. This country offers a business-friendly environment, a legal and tax framework that appeals to both local and foreign investors, and a robust service industry to help navigate the regulatory landscape.
Although the Netherlands doesn’t usually make the short list of dominant jurisdictions, fund managers have discovered the benefits of looking beyond the usual suspects for fund domiciles. With that in mind, let’s explore the advantages that fund managers can enjoy when opening an investment fund in the Netherlands.
By the end of 2020, Dutch investment funds set a record for assets under management (AUM), reaching EUR 1 trillion for the first time. This chart provides more detail on the country’s investment market, with a breakdown by fund type:
The Netherlands has a global reputation for openness to foreign investments, as well as a stable business environment. It’s no surprise that many North American and Asian companies choose to locate their European headquarters here. With a well-educated workforce, this country is ranked as one of the hottest tech hubs in Europe (it also boasts the continent’s largest port).
When investment managers set up a fund in the Netherlands, they have several options. For foreign investors, alternative investment funds (AIFs) typically rank as a preferred fund structure. Although a license may be required for AIFs, exceptions do exist (for example, a license is not needed if AUM does not exceed EUR 100 million). With private equity, a common structure is CV (commanditaire vennootschap) in the form of a limited partnership. Hedge funds and real estate funds typically fall under a different umbrella: fonds voor gemene rekening, or FGR. This is a contractual arrangement between the fund manager and investors. Dutch corporate law does not govern FGRs— instead, the fund manager and investors determine the governance details.
To help ensure a fund’s success, investment managers need support from experts they can trust. The Netherlands holds strong appeal for new managers because this country features a highly-skilled network of service providers, including law firms and fund administrators. These service providers bring a deep understanding of the regulatory landscape, and their guidance can help fund managers avoid pitfalls and blind spots that create unnecessary risk.
Emerging fund managers appreciate the Netherland’s established regulatory regime and local funds experts, which pave the way for efficiency. This high level of stability and support helps alleviate administrative burdens for managers, allowing them to pursue more opportunities for the fund.
The advantageous conditions offered by the Netherlands can help overcome the challenges of launching a new fund. Not only does this country welcome foreign investment, but it also features many layers of support for investment managers. From high-tech infrastructure to experienced service providers, this jurisdiction provides a secure environment to foster success well beyond the launch.