Consultation proposal to amend the FGR regime

Background

As of 1 January 2025, the Dutch tax classification rules for investment vehicles were fundamentally amended. As a result, all Dutch and non-Dutch partnerships are, as a main rule, classified as transparent for Dutch tax purposes, except when a partnership should be considered an FGR. At the same time, a new FGR definition was introduced.

In practice, the interaction of these measures has resulted in uncertainties about the tax classification of partnerships as well as unintended non-transparent tax treatments, especially for Dutch and non-Dutch partnerships that were historically tax transparent. Transitional relief for 2025 and 2026 has not fully resolved these issues.

Reference is made to our website post of 3 December 2025 and our Quoted on this topic.

Purpose of the proposal

The consultation proposal focuses on resolving two key bottlenecks:

1. The potential qualification of (non-Dutch) partnerships as FGRs; and
2. The reliance on regulatory definitions under the Dutch Financial Supervision Act (Wet op het financial toezicht, Wft), which has led to complexity and legal uncertainty.

Amendment of the FGR definition

The statutory FGR definition would be amended by replacing references to the Dutch-law concepts under the Wft of beleggingsfonds (investment fund) and fonds voor collectieve belegging in effecten (fund for collective investment in transferable securities), with beleggingsinstelling (investment institution) and icbe (UCITS). This aligns the tax definition more closely with EU-harmonised concepts under the AIFMD and UCITS Directives and also provides certainty that partnerships with legal personality can qualify as FGR.

A ranking rule would be introduced to ensure that an entity subject to Dutch corporate income tax based on its legal form (e.g. a BV, NV or comparable foreign entity) cannot also qualify as an FGR.

Optional opt-out regime (Afmeldregeling)

The novelty is that the proposal introduces an optional opt-out regime allowing qualifying FGRs, upon request, not to be treated as a non-transparent FGR for Dutch tax purposes. In that case, the fund would generally be treated as tax transparent, with taxation occurring at the level of the investors therein.

Conditions for opt-out

The opt-out regime would be subject to three cumulative conditions:

1. Attribution threshold: assets, liabilities, income and expenses may be attributed to no more than 20 ultimate investors, where a look-though approach is applied to transparent investors (a continuous test).
2. Information obligation: the fund must provide the Dutch tax authorities with investor-level information necessary to ensure effective taxation (including identification data such as name, address and BSN/RSIN).
3. One-time election: the opt-out may be exercised only once per fund.

This opt-out regime is a welcome change to the rules for certain partnerships that wish to be classified as tax transparent, but due to the attribution threshold does not offer a solution for all partnerships and may be burdensome / difficult to meet in practice (notably, in case of foreign partnerships).

Tax consequences of opt-out and re-entry

• Upon opting out, the fund ceases to be independently taxable and becomes tax transparent. Unrealised capital gains are recognised at fund level to preserve the Dutch tax claim.
• If the opt-out subsequently ends (e.g. due to breach of conditions), taxation resumes at fund level, with assets recorded at fair market value on the opening balance sheet.
• The proposal explicitly provides that no roll-over relief or deferral mechanism will be introduced in these situations.

What does this mean for you?

The consultation proposal may be relevant for investment vehicles that have become, or may become, classified as an FGR under the entity tax classification rules.

• Foreign partnerships and fund vehicles may benefit from reduced classification mismatches.
• Funds with up to 20 ultimate investors may be able to maintain tax transparency through the opt-out regime.
• Funds relying on transitional relief should assess whether the opt-out offers a viable long-term solution.
• The opt-out entails ongoing compliance, including investor reporting and monitoring of the investor threshold.

Given the consultation status and the expected entry into force no earlier than 1 January 2027, affected parties should closely monitor developments and assess potential structuring implications.

The Dutch tax treatment of investment funds continues to evolve, and the impact of the proposed amendments will depend on the specific facts and circumstances of each structure. A case-by-case analysis therefore remains essential.

We are actively involved in the consultation process and will continue to monitor developments closely.  

Contact us

For more information, please contact one of our experts below.