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28 January 2021 / article

Investment Management News Update – Winter Edition

An overview in which the Investment Management Practice Group highlights legal, regulatory and tax publications, as well as news items which may be of interest to you, including legislative dates for your diary.

Loyens & Loeff Publications
Publication on the Alternative Investment Fund Managers Directive - AIFMD and Private Equity
Jérôme Mullmaier and Roderik Boogaard contributed to “The AIFM Directive” (third edition), which is part of the International Banking & Finance Law series published by Wolters Kluwer, and offers a comprehensive and in-depth analysis of the AIFMD and its related European investment fund legislation (including the European Venture Capital Fund Regulation, the European Social Entrepreneurship Fund Regulation, the European Long-Term Investment Fund Regulation and the European Money Market Fund Regulation among others) by fund industry experts, fund supervisors, consultants, lawyers and academics.  Jérôme Mullmaier and Roderik Boogaard contributed to the 23rd chapter of this publication, discussing the impact of the AIFM Directive on the private equity sector. To read the contribution, click here

AFM publishes guidance on improving the compliance function
Further to research carried out by the AFM in 2019/2020, the AFM has published some practical guidance for investment firms and managers of investment funds to assess and improve their compliance function. Parties are urged to assess the maturity level of their compliance function and where improvements can be made. To read this update, click here.

AFM updates its AML guidelines (the Netherlands)
On 19 October 2020, the AFM has updated its guidelines (leidraad) on the Dutch Money Laundering and Terrorism Financing Prevention Act and the Sanctions Act 1977. To read this update, click here

Supreme Court rules non-resident UCITS eligible for Dutch dividend tax refund (the Netherlands)
On 23 October 2020, the Dutch Supreme Court has published its judgement in the Köln-Aktienfonds Deka (“Deka”) case. In this long-anticipated judgement, the Supreme Court ruled that non-resident UCITS are in principle comparable to resident UCITS and therefore may be entitled – under stringent conditions – to a refund of Dutch dividend tax (DWHT) based on the free movement of capital under the TFEU. This judgement is relevant for non-resident funds in a similar position and notably for the numerous cases pending before the Dutch courts in which non-resident UCITS claim a refund of Dutch DWHT. To read this update, click here

Liquidity Stress Testing: the CSSF applies the ESMA Guidelines (Luxembourg)
The Luxembourg supervisory authority for the financial sector, the CSSF, issued on 29 September 2020 a new circular regarding the ESMA Guidelines on liquidity stress testing in UCITS and AIFs, that entered into force on 30 September 2020. With this Circular, the CSSF confirms that, as national competent authority, it applies the ESMA Guidelines and has integrated them into its administrative and regulatory approach. To read this update, click here

AFM and DNB renewed enforcement policy enters into force (the Netherlands)
The renewed enforcement policy (handhavingsbeleid) of the DNB and the AFM was published in the official gazette and entered into force on 3 November 2020. To read this update, click here

The Dutch UBO-register for corporate and other legal entities (the Netherlands)
Update 15 December: 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. To read further, 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 this update, click here

Tax
VAT exemption for certain MiFID services
On 4 December 2020, the Dutch Supreme Court ruled that a product designated as individual asset management from a regulatory point of view could benefit from the VAT exemption for fund management, provided that the product was sufficiently comparable to an undertaking for collective investment in transferable securities (UCITS). The fact that the manager did not have a licence for collective asset management was not a problem according to the Supreme Court (we refer to our mailing for further details).

This ruling is a positive development which offers opportunities to apply the VAT exemption to products other than traditional funds. In a decree of 2019, the State Secretary for Finance explicitly took the position that products covered by the supervisory regime for individual asset management cannot share in the VAT exemption. With this ruling the position of the State Secretary has in any case become obsolete on this point. This is good news for – among others – (managers of) securitisation SPVs, because the tax authorities – in part due to the decree of the State Secretary – have taken the position that they can no longer share in the VAT exemption for fund management. Furthermore, in our view this ruling provides arguments to apply the VAT exemption to asset management services provided to family offices.

Deduction of VAT on abort costs
On 12 November 2020, the European Court of Justice ruled that a company can deduct VAT on abort costs, provided the company intended to render VAT taxed services to the envisaged target. The ECJ thereby confirmed the line it set out in previous rulings and provided further guidance on the conditions for deduction of VAT on abort costs, including circumstances under which VAT deduction was not allowed (we refer to our mailing for further details).

In our view this ruling is a confirmation of the ECJ’s earlier case law in the Ryanair case (C-249/17) allowing VAT deduction on abort costs to the extent that the acquiring company intended to render VAT taxed services to its target. In this case, the ECJ further specifies that if the acquired services are subsequently used in respect of activities which do not allow deduction of VAT – such as VAT exempt or non-taxable activities – the previously claimed deduction of VAT must be corrected. The ruling is – in our view – overall a positive and welcome development as it further cements the notion that VAT on abort costs is deductible if the acquirer intended to render VAT taxed services to the target. This ruling may also offer opportunities to claim deduction of VAT on costs which were initially incurred for VAT exempt (or non-taxable) activities but instead are applied in respect of VAT taxed activities.

FATCA / CRS and the Dutch domestic reporting of investment products by investment managers
The Dutch domestic reporting of investment products (binnenlandse gegevensaanlevering beleggingsproducten) is an obligation for entities that qualify as banks, (investment) managers, investment institutions, payment service providers, financial institutions and certain insurers within the meaning of the Dutch Financial Supervision Act (Wet op het financieel toezicht) as well as pension providers within the meaning of the Pensions Act (Pensioenwet). Under the Dutch domestic reporting of investment products, investment managers are required to report information with the Dutch tax authorities on behalf of the funds they have under management in regard of all their ‘account holders’ as per 31 December 2020 (subject to specific exceptions). The filing deadline for the Dutch domestic reporting of investment products is 1 February 2021.

It is possible to combine the Dutch domestic reporting of investment products with the FATCA/CRS reporting (of which the filing deadline is 2 August 2021). For FATCA/CRS purposes financial institutions are required to report information with the Dutch tax authorities in regard of their ‘account holders’ as per 31 December 2020 that are designated as ‘reportable persons’. Entities are considered ‘financial institutions’ if they qualify as custodial institutions (entities holding financial assets for the account of others), depository institutions (entities engaged in banking activities), specified insurance companies and investment entities.

The combined Dutch domestic reporting of investment products and the FATCA/CRS reporting with the Dutch tax authorities takes place via via a secured connection on the Logius Digipoort (which Loyens & Loeff can file on behalf of its clients).

On 13 January 2021, Bert van der Poel, Thomas Moolhuijsen and Matthijs Ravensbergen presented a webinar regarding the obligations under FATCA / CRS and the Dutch domestic reporting of investment products for investment managers.

Tax measures – COVID 19
The Dutch government has published significant tax measures that can be relevant for you and in particular for your portfolio companies. Most of the tax measures have been extended to 2021. For example, companies facing liquidity issues as a result of COVID-19 may still apply for a special tax payment extension (up to 36 months); Loyens & Loeff can assist you in this respect (please contact your trusted adviser of our Investment Management Team). New measures may be announced as the pandemic continues to impact businesses.

Legislative dates for your diary
Consultations EU
01.09.2020 ESMA consultation deadline: on guidance to address leverage risk in the AIF sector, click here
01.09.2020 ESAs consultation deadline: on ESG disclosures standards for financial market participants, click here
04.09.2020 European Commission consultation deadline: A Capital Markets Union for people and businesses – new action plan, click here
08.09.2020 European Commission consultation deadline: Cross-border investment within the EU – clarifying and supplementing EU rules, click here
08.09.2020 European Commission consultation deadline: Sustainable finance – obligation for certain companies to publish non-financial information, click here
31.10.2020 EBA and ESMA joint consultation deadline: Guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU, click here
20.11.2020 ESMA consultation deadline: on MiFIR review report on the obligations to report transactions and reference data, click here
25.11.2020 ESMA consultation deadline: on MiFID II/ MiFIR review on the functioning of Organised Trading Facilities (OTF), click here
18.12.2020 European Commission consultation deadline: Sustainable finance – EU classification system for green investments, click here
11.01.2021 ESMA consultation deadline: Guidelines on the MiFID II/ MiFIR obligations on market data, click here
19.01.2020 European Commission consultation deadline: Long-term investment funds – review of EU rules, click here
29.01.2020 European Commission consultation deadline: review of EU rules on alternative investment fund managers, click here
08.02.2021 ESMA consultation deadline: Guidelines on marketing communications under the Regulation on cross-border distribution of funds, click here

Consultations The Netherlands
01.10.2020 Dutch legislative consultation deadline: Besluit ter uitvoering van diverse verordeningen inzake grensoverschrijdende distributie en duurzaamheid, click here
03.11.2020 Dutch legislative consultation deadline: Implementatiebesluit kapitaalvereisten 2020, click here
11.11.2020 Dutch legislative consultation deadline: Wijziging eindtermen en toetstermen examens financiële dienstverlening voor het examenjaar 2021, click here
18.12.2020 Dutch legislative consultation deadline: Wijzigingswet financiële markten 2022, click here
14.02.2021 Dutch legislative consultation deadline: Wet implementatie richtlijn grensoverschrijdende distributie van beleggingsinstellingen en icbe's, click here

Effective Dates EU
27.10.2020 Publication date: ESMA update opinions on post-trade transparency and position limits under MiFID II and MiFIR, click here
05.11.2020 Publication date: ESMA guidelines on performance fees in UCITS and certain types of AIFs, click here
23.11.2020 Publication date: ESMA guidelines on enforcement of financial information, click here

Effective Dates The Netherlands
27.09.2020 Entry into force: Implementatiebesluit registratie uiteindelijk belanghebbenden van vennootschappen en andere juridische entiteiten, click here
19.10.2020 Publication date: AFM Leidraad Wwft en Sanctiewet Toelichting op de Wet ter voorkoming van witwassen en financieren van terrorisme en de Sanctiewet 1977, click here
29.10.2020 Entry into force: Art III Wijzigingsbesluit financiële markten 2019, click here



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