Netherlands strengthens position as fund base

In October, fund administrator Aztec Group announced the opening of its Amsterdam office to add to its onshore presence. The new base is the firm's sixth office and its fourth onshore location following the UK, Luxembourg and Sweden. Aztec also has two off shore bases in Guernsey and Jersey.

The Dutch office will be headed up by Andreas Demmel, currently a director in the firm's Luxembourg office. He will be joined by Marc Hollander, who has worked in the financial services sector in Amsterdam for the last 20 years.

"For some time we have considered opening a Dutch office, and to work with an existing client keen to have our services available in the Netherlands was a perfect opportunity," says Demmel. "Obviously we already have a strong presence in the Benelux region with our Luxembourg office. For us, a key reason to come to the Netherlands was because of the large and established financial services industry here."

Home to roost
The trend for private equity managers domiciling funds onshore has begun to gain momentum in the wake of the AIFMD, as well as in light of the recent court cases regarding carried interest in Sweden.

Furthermore, the recent publication of Luxembourg tax-minimising structures by the International Consortium of Investigative Journalists is shining a negative light on firms structuring funds and deals in the country. However, the Netherlands has long been an onshore base for private equity funds. "In the history of funds with holding vehicles, the Netherlands was a pioneer," says Demmel. "Luxembourg came a bit later and got more popular, because the structures are easy there, but the Netherlands has always been present in this field."

And the Dutch government has taken steps to ensure the country remains an attractive place to set up alternative investment funds. The Netherlands' Fonds voor Gemene Rekening (FGR) vehicle can be structured as a transparent entity for Dutch corporate income and dividend withholding tax purposes, according to the Holland Financial Centre (HFC) organisation.

The FGR is extremely flexible, and can also be structured as a non-tax-transparent vehicle to qualify as either an Exempt Investment Institution (VBI) or Fiscal Investment Institution (FBI). VBIs are exempt from Dutch corporate income tax and dividend withholding tax; however, this means it lacks treaty protection, which is arguably one of the Netherlands' biggest assets. The country has signed around 90 tax treaties.

Attractive Netherlands
Another advantage of setting up funds in the Netherlands is simply its geography: the country's Schiphol Amsterdam Airport boasts 284 direct connections to 93 other nations. The country also has a 30% personal tax ruling for expats, and its private equity industry is already the fourth largest in Europe, according to HFC, with €22.5bn in assets under management (AUM).

"The Netherlands has the toolkit that you need to do business in private equity," says Demmel. "One big advantage is its very wide double-taxation treaty network. There is also the holding vehicle and efficient fund structuring businesses here, which private equity is obviously using, and there are large pension funds in the Netherlands that invest in private equity."

Indeed, the country's 600 pension funds have €700bn in AUM, according to HFC. Furthermore, two of the three top pension funds in Europe are Dutch: ABP, with €181bn in AUM; and PFZW, with €79bn.

The appeal of the Netherlands is further boosted by the potential for investment opportunities within the country due to its busy investment scene, thanks in part to Amsterdam's status as a start-up hub. Overall, the combination of its ideal fund structuring and fundraising environment with its ecosystem of potential investments has made it a European beacon for doing business.

And as the onshore fund business grows within Europe's private equity industry, the likelihood of other industry service providers setting up shop in the Netherlands is high. Says Demmel: "The Netherlands has a large economy, a great infrastructure and a wider product range complementing the funds industry, so you're one part of a bigger service industry."

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