NETHERLANDS Law and Practice Contributed by: Marc Habermehl, Jeroen Smits, David de Groot and Max de Heer, Stibbe
2. Venture Capital Funds 2.1 Fund Structure Fund Structure
rules apply pursuant to which a limited partner - ship is, in principle, by default treated as tax- transparent for Dutch tax purposes (see 4.2 Tax Treatment for a discussion of the consequences thereof). In certain situations a limited partner - ship may, however, still be treated as opaque for Dutch tax purposes (despite the default clas - sification as tax-transparent), but for VC funds taking the form of a limited partnership these situations are generally less likely to apply. The private limited liability company ( besloten vennootschap ) is also used by VC funds, though less frequently. Main Benefits of a Co-Operative and Tax- Transparent Limited Partnership The main benefits to using a co-operative or tax-transparent limited partnership are that such legal forms provide for great flexibility in terms of creating tailor-made fund arrangements (mainly because a co-operative and a limited partner - ship are not subject to the various strict, manda - tory Dutch corporate law provisions). If properly structured, they provide for “tax-neutral” fund entity, in the sense that they generally do not cre - ate an additional layer of Dutch taxation between the investors in the VC fund and the underlying portfolio companies. A private limited liability company can also be a suitable fund entity from a Dutch tax perspec - tive, but in certain circumstances may (com - pared to a co-operative) create a potential layer of Dutch taxation between (part of) the investors and the underlying portfolio investments (ie, in which case it would not produce a tax-neutral result).
The most common legal forms used by Dutch VC funds are the Dutch co-operative with excluded liability ( coöperatie, UA ) and the Dutch limited partnership ( commanditaire vennootschap ). Co-operative A co-operative is a special type of association, and, as a legal entity, can hold the legal title to the fund’s assets. The co-operative does not have capital divided into shares. Instead, the inves - tors participate in the co-operative as members holding membership rights. Each investor would generally be entitled to a pro rata part of the co- operative’s profits, though there is considerable flexibility in the allocation of profits. Limited partnership A limited partnership is a contractual arrange - ment between the investors (as limited partners) and the VC fund manager (as general partner). The limited partnership itself is not a legal enti - ty, and thus cannot hold the legal title to the assets of the VC fund. The VC fund’s assets are therefore either held by the general partner or by a foundation specifically established for that purpose, which holds assets for the risk and account of the investors. Until 2025, the classification of a limited part - nership as opaque or as tax-transparent was determined on the basis of the so-called “con- sent requirement” , pursuant to which a limited partnership was (only) treated as tax-transpar - ent if the admission and substitution of partners required the prior consent of all (limited and gen - eral) partners. If that was not the case, the lim - ited partnership was classified as opaque. As of 1 January 2025, new Dutch entity classification
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