As per 1 January 2019, the Trust Offices (Supervision) Act 2018 (Wet toezicht trustkantoren 2018, Wtt 2018) entered into force. On the 9th of April 2020 a draft legislative proposal amending the Wtt 2018 (the Proposal) was submitted for consultation. Responses to the Proposal can be submitted up to 8 May 2020. The Proposal as well as the explanatory memorandum to the Proposal may be found here.
The Proposal entails the following prohibitions:
- The prohibition to facilitate the use of a flow-through entity, which currently is one of the trust services under the Wtt 2018.
- It will be prohibited to enter into a business relationship or provide a trust service in case a client, object company or the UBO of a client or object company resides in or has its seat in (a) a high-risk third country or (b) a non-cooperative jurisdictions for tax purposes. The original list of high-risk third countries adopted by the European Commission may be found here, more countries were added to the list in October 2017, December 2017 and July 2018. A list of non-cooperative jurisdictions for tax purposes is kept by the EU Council and can be found here.
The aim of the Proposal is to promote the integrity of the financial system in the Netherlands. In the explanatory memorandum to the Proposal it is explained that the provision of trust services is generally accompanied by high integrity risks and the trust sector is not able to manage these integrity risks itself. The proposed amendments are in line with the Money Laundering Action Plan and the measures recently adopted by the Dutch government to combat tax avoidance and tax evasion in the Netherlands. Flow-through entities are used to "funnel through" funds for tax purposes, such as dividends or royalties, and facilitating the use thereof has an inherent high integrity risk. Furthermore, trust services do not combine well with the involvement of high risk countries or non-cooperative jurisdictions for tax purposes in the structure, because of the high integrity risk that the trust services are being used to for tax avoidance or evasion purposes and/or for money laundering purposes.