NETHERLANDS Law and Practice Contributed by: Nathalie Idsinga and Mignon de Wilde, Arcagna
3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities The Dutch foundation ( Stichting ) is a legal entity that is often used in estate-planning structures both in asset protection and charity structures. It is established by its founders through a notarial deed. A foundation has no members or shareholders. It is not allowed to make distributions to its founders or members of the board and may only make donations to others unless for a charitable or social purpose. The foundation may issue depositary receipts ( cer- tificaten ) that give beneficial rights to assets that are legally owned by the foundation, while keeping the voting rights with the foundation. A foundation that has issued depositary receipts is generally referred to as a STAK ( stichting administratiekantoor ). Through issuing depositary receipts, the legal ownership and economic rights to the assets, often shares, are sepa - rated. A STAK is frequently used in wealth and holding structures for family governance purposes. 3.2 Recognition of Trusts The Netherlands does not have domestic trust law. However, as a party to the Hague Trust Convention, the Netherlands recognises foreign trusts established in accordance with the Convention’s requirements. In principle, trust assets are not subject to Dutch succes - sion law, including forced heirship rules. However, the transfer of assets into a trust may, in some cases, be considered a gift that infringes upon forced heirship rights. This could give rise to a claim by a forced heir against the trustee. Under the Hague Trust Conven - tion, recognition of a trust may be refused if it would
fore necessary to determine whether the trust itself is subject to corporate income tax. A foundation is only subject to corporate income tax if it carries on a business enterprise. If the trust’s assets and liabili - ties consist solely of portfolio investments or passive shareholdings, it is generally not subject to corporate income tax. Stichting Administratiekantoor (STAK) A STAK is regarded as the legal owner of the assets and liabilities transferred to it, while beneficial owner - ship rests with the depositary receipt holders. As a result, a STAK has a liability to its depositary receipt holders equal to the value of the assets and liabilities it administers and does not have equity or taxable income of its own. If a STAK holds solely (portfolio) investments or passive shareholdings, and potentially also debts, it could be argued that the holder(s) of depositary receipts are subject to tax in Box 3 on the net value of the depositary receipts, as opposed to being subject to tax in Box 3 on the economic owner - ship of each separate asset. For Box 2 substantial interests, if properly structured – through its articles of association and trust condi - tions – a STAK is considered fully transparent for tax purposes. In this case, the depositary receipts are fully assimilated to the underlying assets. However, if the trust conditions no longer allow the underlying assets to be identified with the depositary receipts, a deemed transfer of assets may be recognised for Dutch tax purposes. 3.4 Exercising Control Over Irrevocable Planning Vehicles A Dutch foundation can function as a civil law trust. In this structure, an individual transfers assets to the foundation and imposes an obligation on the founda - tion to distribute the assets and any resulting income to designated beneficiaries. The foundation becomes the legal owner of the assets, but typically holds them only temporarily. The foundation may be granted dis - cretionary powers to determine when and how dis - tributions are made to beneficiaries. The individual may retain a degree of control by serving as a board member of the foundation or by holding the authority to appoint and remove board members.
prejudice forced heirship entitlements. 3.3 Tax Considerations: Fiduciary or Beneficiary Designation Trust
If a foundation is used as a trust or trust-like entity, it generally qualifies as an SPA to which the SPA regime applies (see 1.1 Tax Regimes ). The SPA regime does not apply to Dutch corporate income tax. For corpo - rate income tax purposes, the assets and liabilities of a trust are not attributed to the donor. It is there -
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