Fund registration
A Dutch foundation (stichting) is a legal entity under Dutch law intended to achieve specific objectives outlined in its Articles of Association through assets allocated for that purpose.
Specificity of Dutch funds
The foundation differs from other types of legal entities in that it has no members (otherwise, it would be an association) and, as a rule, it may not aim to make payments to the persons who created it or participate in its governing bodies (otherwise, it would be a company).
Beyond these two basic requirements, Dutch foundation law provides significant flexibility regarding both the use of the foundation for various purposes and the distribution of powers within the foundation.
STAK (Voting trust foundation)
In the Netherlands, foundations are often used to concentrate voting rights on shares legally owned by the foundation (in Dutch, such a foundation is usually referred to as a "Stichting Administratiekantoor" or abbreviated as "STAK"). At the same time, the economic benefits associated with these shares are transferred to third parties—holders of foundation certificates.
The shares held by the foundation (STAK) may belong to a Dutch or foreign legal entity, provided that the corporate law of the foreign jurisdiction allows for such a separation between economic ownership and legal title. In exchange for the shares it acquires, the foundation (STAK) issues certificates (similar to depositary receipts) certifying rights to the shares, excluding voting rights.
If there is a distribution of profits on shares held by the foundation, STAK must immediately forward these dividends to the holders of the depositary receipts. The foundation is entitled to deduct a small amount for its administrative costs, if stipulated. With this direct allocation, STAK is generally considered a transparent structure for tax purposes, meaning there are no additional tax implications at the foundation level.
Depositary receipts can be sold and transferred by their holders, typically subject to restrictions imposed by the foundation on such transfers. Generally, STAK acquires shares immediately after the company's registration, but it can also act as a founder or, later on, issue depositary receipts to individuals for whom the establishment of STAK was intended.
Fund for holding assets in the interests of third parties
It is also possible to register a foundation in the Netherlands to own and manage certain assets (not only shares but also, for example, real estate) in the interests of third parties without issuing depositary receipts.
Family Foundation in the Netherlands
A family foundation, in accordance with Dutch law, is usually created to meet the material needs of members of a particular family. For this purpose, certain funds and / or assets (such as shares or real estate) are transferred to the family foundation, which distributes these assets or income from them among family members (beneficiaries) in accordance with the wishes of the person (persons) who initiated the creation of the family foundation (founder) ...
It should be noted that under Dutch law, the fund cannot aim to distribute assets / income to persons who participate in one of its corporate bodies. Also, such distribution in favor of third (outside) individuals or legal entities is not allowed if these distributions are not of a non-commercial or social nature. However, in practice, this limitation can be leveled by the founder, for example, through the mechanism of donation to the fund under the obligation of the fund to make payments to certain beneficiaries, which are indicated in the letter of wishes. This Dutch foundation application is relatively new and little known.
Investment funds
The Netherlands is often used as the optimal jurisdiction for registering and managing various types of investment funds. The assets of such funds may include cryptocurrency, securities, real estate, and other liquid objects. The legislation allows a wide range of investors to be admitted to such funds, and the activities are carried out in accordance with the applicable Dutch legislation.
In particular, in the field of crypto assets, Dutch funds based on contractual obligations FGR (Fonds voor gemene rekening) and Dutch mutual funds have become widespread. The legal title to the assets of such investment funds is often structured using Dutch stichting / STAK, and the mechanics of their work allow for a fairly favorable tax regime and the necessary flexibility in investment.
Charitable foundations
One of the main purposes of Dutch foundations is to conduct non-profit and charitable activities.
To obtain charitable status when opening a fund, it is necessary to take into account the specific provisions in the charter, which the legislation establishes as mandatory for charitable organizations. After that, the fund is subject to accreditation in ANBI, thereby receiving the necessary status and can attract donations.
If you would like to register a foundation in the Netherlands (STAK, fund for asset management, family or charitable foundation, FGR mutual fund), contact us for competent support of this task.
