Fund registration

A Dutch foundation (stichting) is a legal entity under Dutch law which is intended to achieve certain objectives set out in its Articles of Association through assets allocated for that purpose.

Specificity of Dutch funds

The fund 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 have the goal of making payments to the persons who created it or take part in its governing bodies (in otherwise it would be a company).

Apart from these two basic requirements, the Dutch foundations law provides great flexibility both with regard to the use of the fund for various purposes and with respect to the distribution of powers within the fund.

STAK (Voting trust foundation)

In the Netherlands, foundations are often used to concentrate voting rights on shares that are 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 fund certificates.

The shares held by the fund (STAK) may be shares of a Dutch legal entity or a foreign legal entity, provided that the corporate law of that foreign jurisdiction allows for such a separation between economic ownership and legal title. In exchange for the shares acquired by it, the fund (STAK) issues certificates (the closest analogue is depositary receipts) certifying the rights to the shares, with the exception of voting rights.

If there is a distribution of profits on shares held by the fund, STAK must immediately forward these dividends to the holders of the depositary receipts. The Foundation is entitled to make a small deduction of its administrative costs, if provided. With this direct allocation, STAK is generally considered a transparent structure for tax purposes, which means that there are no additional tax implications at the fund level.

Depositary receipts can be sold and transferred by their holders, as a rule, subject to the restrictions imposed by the fund on such transfers. As a rule, STAK acquires shares immediately after the registration of the company, but it can also act as a founder or, somewhat later, issue depositary receipts to persons in whose interests the establishment of STAK took place.

Fund for holding assets in the interests of third parties

It is also possible to register a fund in the Netherlands for the purpose of owning and managing certain assets (not only shares, but also, for example, real estate) in the interests of third parties without issuing depositary receipts. The contractual claim of the person in favor of the assets registered on the fund may subsequently be sold or inherited. This use of the Dutch Asset Management Fund is usually seen as temporary. Subsequently, such a structure can be converted to STAK.

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.