The finance ministry confirms that there has been an explosion in the number of tax number applications for joint account funds.
Escape from box 3
One cause of this increase may be the flight from box 3 (income from savings and investments) to box 2 (income from substantial interest). In box 3, you pay tax on a fixed return. If you transfer assets from box 3 to box 2, tax is calculated on the return you actually earn. If your actual return is lower than the flat rate return, switching to box 2 gives you a sometimes substantial tax advantage. VWGNijhof will be happy to calculate it for you.
But then, in itself, you don't necessarily need a mutual fund. You might as well put the assets into a private limited company. Then you are working with a legal form that is a lot more familiar. And you can run a BV all by yourself. The disadvantage is that you have to have the articles of association laid down in a notarial deed. And you have to file some data with the trade register every year.
UBO register
Much more obvious is that the large number of new mutual funds is caused by the UBO register to be introduced in the Netherlands in the near future. UBO stands for Ultimate Beneficial Owner. In Dutch: the beneficial owner. Under European regulations (the fourth anti-money laundering directive) requires all European Union member states to create a register. In it, natural persons ultimately entitled to 25% or more will be registered.
A mutual fund is not a legal entity. As a result, the UBO of a mutual account fund would not have to disclose himself through the UBO register. Nor does a mutual account fund have to file any information with the trade register. Of course, you do not have to have criminal intentions at all if you do not want information about your assets on the street.
Common account fund
A mutual fund is nothing more than an arrangement between two or more people. The arrangement involves investing assets together with your co-participants and sharing the proceeds. The joint account fund is not regulated under civil law. The agreements may be private. Larger joint account funds often have a somewhat more complex structure, in which, for example, foundations manage and hold the invested assets.
For the fund to be liable to corporate tax, it must be open. This means that the units can be traded without the consent of all participants. The tax authorities set the condition that one participant should not hold 90% or more of the fund. Minor children and partners married in community of property do not count as a separate participant. If you want adult children to participate, you may not lend them the funds necessary to do so.
Like a limited company (BV), an open mutual fund can be rigged for corporation tax purposes if fiscal investment vehicle (fbi) or as exempt investment vehicle (vbi). For the deposit guarantee scheme an open mutual fund is not a stand-alone entity.
Want to know more?
Would you like to know more about the possibilities of placing your assets in a limited liability company or open mutual fund? Contact one of our consultants.