The New Dutch Entity Tax Classification Rules: Prevailing Classification As Dutch Fund For Joint Account (FGR)

As from 2025, as a main rule, Dutch (commanditaire vennootschap; CVs) and foreign limited partnerships will be classified as transparent for Dutch tax purposes, except when a limited partnership should be considered a fund for joint account (fonds voor gemene rekening; FGR). In case of the latter, both a tax transparent and a non-transparent classification remain to apply as from 2025.

Due to the prevailing classification of the FGR, under circumstances, tax transparent limited partnerships that are 'investment funds' (Fund LPs) may transition into a non-transparent FGR as of 2025, however only when also possessing the other key characteristics of an FGR

Background

The potential reclassification of a Fund LP into a non-transparent FGR and the relevant criteria under which such a reclassification may occur are still heavily debated. We are still trying to get more clarity from the Dutch government on these criteria, in cooperation with various industry bodies.