Author: Evert-Jan Spoelder

• As part of the 2025 Dutch tax plans, Dutch tax law will be amended from 1 January 2025 in a way that a Dutch ‘Commanditaire Vennootschap’ partnership will in principle classify as tax transparent. Currently, tax transparencv requires that the LPA provides for unanimous consent on any LP admission/transfer/relative-change-of-ownership.
• The new tax law includes a rule that entails potential overkill for CV’s that classify as ‘investment fund’ for Dutch securities law purposes (basically: funds with a regulated/registered/exempt manager). These CV’s may classify as non-tax-transparent from 2025 onwards, hence subject to Dutch corporate tax on their worldwide income, and withholding tax on distributions. Two exceptions apply:

• 1. The CV is an active PE fund. No guidance is given to the definition of ‘active PE fund’. Controlling majority stakes are important indicators. It is yet unclear if the exception equally applies to venture capital funds.
  2. Amendment of the LPA in a way that LP interests can – basically – only be transferred via the Fund, i.e. through redemption and subsequent issuance.

• On the second exception: in reply to criticism by the Dutch fund industry on the timing constraints of amending LPA before 2025, the government has announced that such amendment may also be done in 2025, provided that the fund manager expresses its intention to amend still in 2024.
• The overkill rule above is considered an unfortunate development. Whilst the rule was initially meant to apply to foreign (i.e. non-Dutch) real estate funds only, the rule unfortunately also applies to certain Dutch funds.
• Last week, in reply to criticism by the Dutch fund industry, the Dutch government has agreed to review this overkill rule in the first half of 2025. Whilst the outcome of this review is uncertain, the government may conclude to amend the overkill rule. More news is expected in the second half of 2025 – probably in September as part of the Tax Plans 2026.

On September 17, 2024, the Tax Plan for 2025 was published. We have created an overview of the main changes for you.

See attachment.

As per 2025, new rules will apply to the classification of Dutch and foreign entities as transparent or non-transparent.

Dutch (CV) and foreign limited partnership entities will classify as tax transparent by default. Hence, in principle no ‘unanimous consent’ required anymore on LP admissions/transfers (current requirement).

However, the government introduces an exception to certain Dutch and foreign fund entities engaged in ‘passive’ investments. These will classify as non-transparent and become subject to Dutch taxes. A carve-out applies to fund entities engaged in ‘active’ investments, or implementing a ‘redemption-only’ liquidity mechanism. Implementation may take place in 2025, subject to conditions.

See flowchart on the next slide for more details.

Per 2025, the Dutch limited partnership (CV) and foreign similar entities will classify as tax transparent by default. This will apply to
the Dutch CV, and foreign similar LP entities like SCSp, LP and KG.

• The default classification as tax transparent implies that the current “unanimous consent” requirement on LP admissions and transfers (currently relevant to classify as tax transparent) will no longer be a requirement to qualify as tax transparent as of 2025.
• A specific exception will apply to certain fund entities.
• The Dutch tax classification of foreign entities incomparable to a Dutch legal entity (e.g. UK LLP, Irish ULC, German KgAA, French SCPI) will align with the entity’s tax treatment in the foreign jurisdiction (symmetry approach). An exception applies if the foreign entity is resident in the Netherlands, which will result in a non-transparent classification (fixed approach).
• A deemed disposal rule will apply to Dutch and foreign entities switching their Dutch entity tax classification from non-transparent to tax-transparent, both at entity and investor level.
• Certain transitional rules and roll-over relief will be available, subject to meeting certain conditions.

On Tuesday 20 September 2023, the Dutch government announced its tax plans for 2023. See PDF for a quick overview.