Background

As of 1 January 2025, 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, an amended FGR definition was introduced.

These changes bring investment funds – which are structured as a Dutch or non-Dutch limited partnership (or other type of partnership entity) – in scope of an (often unintended) (re)classification as a non-transparent vehicle for Dutch tax purposes. The Dutch caretaker government is investigating the possibility of additional amendments to the FGR definition to take away certain issues and uncertainties that have arisen in this respect. A legislative proposal in this regard is expected to be published for public consultation before year-end 2025, with entry into effect on 1 January 2027 at the earliest. In the meantime, grandfathering rules may provide relief to the moment that any changes in legislation will enter into effect. We refer to our website post on the current state of play with regard to the FGR definition for further details.

Fund Decree

The (prior) Fund Decree, initially published in December 2024, elaborates on the cumulative criteria that must must be met by an investment fund to be classified as, or re-classified into, a non-transparent FGR. The updated Fund Decree published on 2 December 2025 contains clarifications on certain items that had previously not been addressed, including the qualification of an investment fund under the Dutch Financial Supervision Act (Wet op het financieel toezicht, Wft), the scope of a ‘normal’ portfolio management strategy (beleggen), and the tradeability of participation rights (see further below). While these updates provide more guidance, such as clarifying that family funds cannot qualify as FGRs and outlining conditions for lending activities, key uncertainties remain.

What’s new?

In the updated Fund Decree, the following new items are addressed:

Takeaways

The updated Fund Decree provides for some helpful insights, while legislative proposals to amend the FGR definition are underway. For now, some key takeaways are:

  • Registration with the AFM or equivalent EU Financial Supervision Authority can be used to substantiate the investment fund classification.
  • Family-only funds fall outside the Wft and cannot qualify as FGRs.
  • Participation in tax-transparent LPs that carry on a business enterprise does not automatically make the fund a business enterprise and exclude it from FGR classification.
  • Safe harbour criteria have been introduced for debt funds in relation to normal portfolio management.
  • For determining whether a fund qualifies as a Redemption Fund, certain transfers are disregarded.

Loyens & Loeff has ample experience on this topic. We are well placed to advise on these matters as we can provide combined tax, legal and regulatory advice in relation hereto.

Should you have queries or need any assistance, please contact your trusted adviser at Loyens & Loeff or one of the specialists mentioned below.