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30 September 2020 / article

Investment Management News Update – Summer 2020

The Investment Management News Update: an overview in which our Investment Management Team highlights recent developments.

Loyens & Loeff publications

Draft bill for the Act on Further Remuneration Measures in the Financial Sector (the Netherlands)
To read this update (in Dutch only), click here.

Dispatch concerning new fund category (L-QIF) published (Switzerland)
On 19 August 2020, the Swiss Federal Council adopted the dispatch (Botschaft) concerning the amendment of the Collective Investment Schemes Act and other acts aimed at increasing Switzerland’s competitiveness as a fund location and keeping a bigger part of the value chain of the funds business in Switzerland. To read this update, click here.

Third country firms operating in Luxembourg: Regulator clarifies “provision of investment services in Luxembourg” (Luxembourg).
On 1 July 2020, the CSSF published a new regulation and circular aimed at clarifying the legal regime for third-country firms intending to provide investment services in Luxembourg. To read this update, click here.

EU Parliament adopts Taxonomy Regulation
In recent years the European Union has paid increasing attention to sustainability in its policy making particularly in the financial sector. In March 2018 the European Commission published its Action Plan on Financing for Sustainable Growth. The Action Plan has three main objectives: - to redirect capital flows towards sustainable investment in order to achieve sustainable and inclusive growth; - to manage financial risks arising from climate change, resource depletion, environmental degradation and social issues; and - to promote transparency and long-term sustainability in financial and economic activity. To read this update click here Dutch UBO-register bill approved by Senate (the Netherlands) On 23 June 2020, the Dutch Senate approved the ‘Act on the registration of ultimate beneficial owners of corporate entities and other legal entities’ (the UBO-register). The UBO-register is a register that contains certain personal details of ultimate beneficial owners (UBOs) of Dutch corporate entities and other legal entities. To read this update, click here.

The Securitisation Regulation and Alternative Investment Funds: Friends or Foes? (Luxembourg)
In 2019, the European securitisation landscape became subject to a major overhaul when the Regulation (EU) 2017/2402 of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation entered into force. The aim of the Securitisation Regulation is essentially to consolidate the legal framework governing European securitisations. This chapter will focus on whether this specific regulation should be applicable to AIFs as issuers and securitisation special purpose entities. In this Q&A published in International Comparative Legal Guide : Securitisation 2020, our experts assess the application of the Securitisation regulation to the Luxembourg AIFs, analysing cases ruled by the European Court of Justice, and how this court interpreted the EU legislation, based on its wording, purpose and context. To read this update, click here.

AFM investigation into AML/CTF risk management at AIFMs (the Netherlands)

Pursuant to the Dutch act on the prevention of money laundering and financing of terrorism (Wet ter voorkoming van witwassen en financieren van terrorisme), AIFMs are required to determine and assess their risks for money laundering and financing of terrorism (AML/CTF). The AFM has investigated the AML/CTF risk assessment at 15 AIFMs. Based on the investigation, the AFM concludes that the investigated institutions have to improve their AML/CTF risk management and publishes recommendations in this respect. To read this update, click here

Data Protection & Privacy Updates
For updates on the GDPR, please visit the webpage of the Loyens & Loeff Data Protection and Privacy Team. To read these updates, click here.

UBO-register

The Dutch UBO-register for corporate and other legal entities (the Netherlands)
As of 27 September 2020, corporate and other legal entities that are incorporated or established under Dutch law and that are registered in the Dutch Trade Register are required to obtain, hold and register certain personal information on their ultimate beneficial owners (UBOs) in the Dutch UBO-register. In our newest edition of Quoted, we describe the key elements of the Dutch UBO-register. To read this update, click here

Dutch UBO-register bill approved by Senate (the Netherlands)
On 23 June 2020, the Dutch Senate approved the ‘Act on the registration of ultimate beneficial owners of corporate entities and other legal entities’ (the UBO-register). The UBO-register is a register that contains certain personal details of ultimate beneficial owners (UBOs) of Dutch corporate entities and other legal entities. To read this update, click here

15.05.2020 Dutch legislative consultation deadline: implementatiewet registratie uiteindelijke belanghebbende van trusts en soortgelijke juridische constructies, click here.
08.07.2020 Entry into force (partially on 27.09.2020): Implementatiewet registratie uiteindelijk belanghebbenden van vennootschappen en andere juridische entiteiten, click here.

Tax

Application of VAT exemption for fund management
On 25 September 2020 the Advocate General (AG) of the Dutch Supreme Court issued an opinion in two cases regarding the application of the VAT exemption for fund management. In both cases, the question was whether investment management services regulated under MiFID could – under certain circumstances – benefit from the VAT exemption for fund management. More specifically, the questions were whether (i) investments of multiple clients which were pooled on the basis of ‘investment profiles’ could qualify as a ‘fund’ within the meaning of the VAT exemption and (ii) whether regulation under MiFID was sufficient to conclude that the services were subject to the required ‘specific state supervision’ within the meaning of the VAT exemption.

According to the AG, application of the VAT exemption requires – among others – that investment management services are rendered in respect of a ‘fund entity’ and that such fund entity qualifies as a VAT taxable person. In both cases, the referring courts did not establish whether these requirements were met and thus the AG has advised the Dutch Supreme Court to refer both cases back to the courts for further investigation. In respect of the question regarding regulation under MiFID, the AG concluded that this should be sufficient to conclude that the services are subject to ‘specific state supervision’ within the meaning of the VAT exemption.

Our comments
According to the AG, the VAT exemption requires a ‘fund entity’ which qualifies as a VAT taxable person. In our view these requirements are not apparent from existing case law or administrative guidelines, nor are they logical from the viewpoint of the purpose of the VAT exemption, therefore it remains to be seen whether the Dutch Supreme Court will follow the AG’s conclusion. Should this be the case, it would likely imply a limitation of the application of the VAT exemption since investment funds often do not qualify as a VAT taxable person. The AG’s view in respect of MiFID and the ‘specific state supervision’ requirement – if followed by the Dutch Supreme Court – could result in a more broad application of the VAT exemption. We will of course provide updates as the cases develop.

Legislative dates for your diary

Consultations EU
18.05.2020
  European Commission consultation deadline: Review of the regulatory framework for investment firms and market operators , click here.
08.06.2020  ESMA consultation deadline: Draft Regulatory Technical Standards under the Benchmarks Regulation, click here.
30.06.2020  ESMA consultation deadline: on cross border distribution of funds, click here.
06.07.2020  European Commission consultation deadline - Sustainable finance:

  • obligation on investment funds to advise clients on social & environmental aspects, click here.
  • obligation for investment firms to advise clients on social and environmental aspects of financial products, click here.
  • obligation for alternative investment funds to advise clients on social & environmental aspects, click here.

15.07.2020  European Commission consultation deadline: Consultation on the renewed sustainable finance strategy, click here.
29.07.2020 
European Commission consultation deadline: Money laundering & terrorism financing – action plan, click here.
01.09.2020  ESMA consultation deadline: on guidance to address leverage risk in the AIF sector, click here.
01.09.2020  ESMA consultation deadline: on cloud outsourcing guidelines, click here.
01.09.2020  ESAs consultation deadline: Joint Consultation Paper on ESG disclosures standards for financial market participants, click here.
08.09.2020  European Commission consultation deadline: Cross-border investment within the EU – clarifying and supplementing EU rules, click here.

Consultations The Netherlands
07.07.2020  Dutch legislative consultation deadline: Wijziging Bbft 2019 mbt onder meer de verdeling van de toezichtkosten van de AFM, click here.
07.08.2020  Dutch legislative consultation deadline: Implementatiewet richtlijn prudentieel toezicht beleggingsondernemingen, click here.
13.08.2020  Dutch legislative consultation deadline: Wijzigingsbesluit financiële markten 2021, click here.
01.10.2020  Dutch legislative consultation deadline: Besluit ter uitvoering van diverse verordeningen inzake grensoverschrijdende distributie en duurzaamheid, click here.

Effective Dates EU
12.07.2020  Entry into force: Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, click here.
30.09.2020  Application date: ESMA guidelines on liquidity stress testing in UCITS and AIFs, click here.

Effective Dates The Netherlands
12.05.2020  Entry into force:

  • Implementatiewet wijziging vierde anti-witwasrichtlijn, click here.
  • Implementatiebesluit wijziging vierde anti-witwasrichtlijn, click here.
  • Implementatieregeling wijziging vierde anti-witwasrichtlijn, click here.

18.06.2020  Entry into force: Regeling bekostiging financieel toezicht 2020​, click here

Contact

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Disclaimer
Although this publication has been compiled with great care, Loyens & Loeff N.V. and all other entities, partnerships, persons and practices trading under the name 'Loyens & Loeff', cannot accept any liability for the consequences of making use of this issue without their cooperation. The information provided is intended as general information and cannot be regarded as advice.



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