Financial Services

Dutch legislative proposal to amend investment regime goes to consultation

Published on 16th Mar 2023

Consultation on the VBI, FBI and FGR regime ends on 5 April 2023 

On 8 March 2023, the legislative proposal to amend the Dutch tax-exempt investment institution (VBI), fiscal investment institution (FBI) and fund for joint account (FGR) regime (Wet aanpassing fonds voor gemene rekening, vrijgestelde beleggingsinstelling en fiscale beleggingsinstelling) was published for public consultation.

Main changes

The most important changes under the proposal are:

  • the FBI may no longer directly invest in real estate as of 1 January 2025 (indirect investments through a regularly taxed company are still allowed); and
  • the definition of an FGR would be changed in such a way that only FGRs which (i) are regulated under the Dutch financial supervision legislation (WFT) and (ii) have publicly traded participations, are opaque for Dutch tax purposes. 

Currently, these investment institutions are commonly used by foreign investors and (high net-worth) individuals and families to structure their investments. The new rules aim to bring the actual use of these investment institutions in line with their original purpose – joint investments by a (large) group of investors – and to reclaim taxing rights on Dutch real estate investments by foreign investors. The intended purpose may not currently reflect what is happening in reality, because of the 0% tax rate of FBIs, in conjunction with a (partial) relief under applicable tax treaties or a domestic exemption. 

As a result, if this legislative proposal becomes effective, it could be favourable for (high net-worth) individuals and families to restructure their investment from FBIs to (transparent) FGRs. 

The Dutch government has anticipated the need for restructurings as a result of the proposal. Therefore, the proposal includes a specific temporary exemption from real estate transfer tax (RETT) to facilitate such restructurings.

Changes to fund for joint account regime

Currently, the qualification of an FGR as either tax transparent (the closed FGR) or opaque (the open FGR) is based on the so-called accession requirement (toetredingsvereiste) or redemption requirement (inkoopvereiste). 

This means that an FGR is transparent if (i) the participations in the FGR are only transferable with unanimous consent of all participants or (ii) the participations may only be transferred by way of redemption by the FGR or transferred to a limited group of relatives. Consequently, an FGR with (unrestricted) transferrable participations qualifies as opaque for Dutch tax purposes. Comparable foreign entities are generally classified for Dutch tax purposes on the basis of the same rules. 

Under the proposal, an FGR will only be opaque if the FGR is (i) regulated under the WFT and (ii) the participations in the FGR are tradeable. In all other situations, the FGR will be qualified tax transparent. 

This means that family-owned FGRs that currently qualify as opaque and potentially apply the VBI regime may become transparent and can no longer apply the VBI regime (as most family funds will not qualify as investment institution under the WFT).

Due to the shift of the nature of the FGR from opaque to transparent, the assets and liabilities of the FGR are deemed to be transferred from the FGR to its participants and the participations in the FGR are deemed to be disposed by the participants at their fair market value for Dutch tax purposes. 

This may lead to an immediate tax payable in cases where the book value of the assets which are deemed to be transferred is lower than the fair market value of those assets. 

In addition, real estate transfer tax may be due in cases where the assets of the FGR consists (partially) of real estate.

As these changes may result in a "dry" tax charge, several facilities are being proposed: 

  • a rollover facility (in case all participants are subject to Dutch corporate income tax);
  • a share-for-share merger facility including (under certain conditions) a RETT exemption (in case the participants are individuals and want to transfer their participation in the FGR to a (newly established) legal entity. This way, individuals can effectively establish the same rollover facility which is available for legal entities); and/or
  • a deferred payment facility (spread out over a maximum of ten years).

Proposed changes to tax-exempt investment institution

The proposed changes to the VBI regime are in line with the changes to the FGR. Only entities regulated under the WFT are eligible for the VBI regime.

Changes to fiscal investment institution

Currently, there are (in practice) two types of FBI: the real estate FBI and securities FBI. As the name suggests, the real estate FBI invests solely in real estate and the securities FBI invests solely in securities, bonds and other financial instruments. 

Under the proposal, the FBI may no longer directly invest in real estate and as a result, the real estate FBI will be abolished. 

Indirect investments in real estate via (opaque) real estate investment companies are still allowed under the proposal. It provides for a specific temporary RETT exemption (which only applies during 2024 and subject to certain conditions) in situations where the economic ownership of the real estate should be restructured to establish a tax transparent and tax neutral structure as a result of the abolishment of the real estate FBI. 

A typical restructuring where the RETT exemption applies, would generally consist of the following steps. The FBI:

  • forms an FGR and acquires a participation in this FGR;
  • transfers the economic ownership of the real estate to the FGR by way of a contribution on  the participation in the FGR;
  • transfers the acquired participation in the FGR to its participants;
  • will be converted into a custodian foundation (stichting bewaarder) which will act as the holder of the legal ownership of the real estate. 

The RETT exemption would not apply in situations where the legal ownership is transferred or in case of restructurings which are not a result of the proposal.


The public consultation on the proposal ends 5 April 2023. 

The changes with respect to the FGR and VBI are envisaged to enter into force as of 1 January 2024. The changes to the FBI regime would enter into force a year later, on 1 January 2025.

Osborne Clarke comment

The proposed rules could potentially have a significant impact on existing fund structures, in particular existing FGRs or comparable foreign entities that currently do not apply the redemption requirement.

The Osborne Clarke team is happy to assess the impact of the proposed rules on existing fund structures and the scope for potential restructuring alternatives.

If you would like to discuss these issues, please get in touch with your usual Osborne Clarke contact, or one of our experts below.


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

Connect with one of our experts

Interested in hearing more from Osborne Clarke?

Upcoming Events