Dutch first to pass AIFM bill

The Dutch Senate is likely to pass the bill implementing the Alternative Investment Fund Managers’ Directive (AIFM) into law on 23 October, according to a senate spokesman in an email with PE Manager.

Earlier this month the Dutch Parliament approved the bill, which has singled out private equity and real estate funds for a more lenient depository regime under the heavily criticised directive.

The bill states that closed-ended funds with lock-ins of at least five years and hold assets that are “generally not required to be held in custody” will have a more relaxed regime, according to law firm Loyens & Loeff.

This means that private equity assets can be held by “an entity which carries out depository functions as part of its professional or business activities” as well as custodian banks. Accordingly lawyers, notaries or trust companies could act as depositories as they are already regulated but fund administrators would not meet this criterion.

The bill also introduces an amendment to the Dutch tax rule which determines whether an entity is considered to be a tax resident of the Netherlands – introducing a carve-out for certain funds which are registered in another EU member state but managed in the Netherlands by a Dutch manager. 

Under the current Dutch tax regime such a fund may be treated as a Dutch tax resident, and therefore its distributions may be subject to a Dutch withholding tax. But the bill states that funds simply managed by Dutch managers would not necessarily be considered a Dutch tax resident, according to Loyens & Loeff.

“Dutch based asset managers– with use of the new set of legislation – could optimally use easing tax rules to reduce unnecessary costs inherent to existing tax and legal structures. With the current financial infrastructure it is expected that the Netherlands is able to attract some of the asset managers to bring business over from their current offshore locations,” said in a statement Netherlands-based KPMG partner Marco Frikkee.

The Dutch were not the only country with aspirations of transposing the directive in to law quickly in a bid to win more fund business. Luxembourg has also put a draft bill in front of its parliament which is expected to be approved before the end of the year.