On 15 December 2025, the Dutch Ministry of Finance published a new legislative proposal for consultation regarding the fund for mutual account (fonds voor gemene rekening; FGR) definition. This is highly relevant for the (PE) Funds sector, as it impacts the Dutch entity classification rules for Dutch and foreign entities.

Background

The Dutch entity tax qualification rules were substantially reformed as of 1 January 2025 to reduce hybrid mismatches by aligning the tax treatment of Dutch and foreign entities and partnerships (e.g., CVs and foreign LPs). Under the new regime, most Dutch and non-Dutch partnerships are tax-transparent unless they qualify as non-transparent FGR, a category of collective investment vehicle treated as tax-opaque for Dutch corporate income tax purposes.

However, the expanded definition of FGR has raised practical challenges because many entities that were previously transparent (including partnerships and certain investment vehicles) now risk unfamiliar non-transparent treatment. This has created significant uncertainties and unintended tax consequences in cross-border structures, particularly where foreign entities or funds could unexpectedly fall within the FGR scope.

In response to these issues, the Dutch Ministry of Finance now published a new legislative proposal including a new FGR definition and an opt-out mechanism.

New FGR definition and opt-out mechanism

The core elements of this legislative proposal are as follows:

Revised FGR definition

The proposal adjusts the FGR definition by modifying how the regime references the Dutch Financial Supervision Act (Wft). Instead of the current broader references to “investment fund” concepts, it now aligns more directly with established Wft definitions such as “investment institutions” and “ICBE”. The aim hereof is to reduce ambiguity, especially for foreign funds.

Opt-out mechanism

The draft introduces an optional opt-out regime under which certain funds with a restricted investor base can request not to be treated as an FGR for Dutch tax purposes, provided they meet the following specific conditions and supply the required information in time:

• maximum of twenty attributable participants (ongoing test)
• Provision of relevant information about participants to the tax authorities
• The opt-out mechanism may be applied only once per fund.

Tax consequences of opt-out

• Upon opting out, if the fund was non-transparent before opting out, the fund becomes tax transparent. In such case, the fund is subject to Dutch corporate income tax in respect of unrealised capital gains (no roll-over facilities available).
• If the opt-out subsequently ends, for example because the conditions are no longer met, the fund becomes subject to corporate income tax. Assets appear on the tax balance sheet for fair market value.

Practical remarks and next steps

• The consultation runs through 2 February 2026. After review of responses, the Ministry will decide whether and how to submit the draft to the Dutch Parliament.
• Legislative enactment (if adopted) is expected to occur no earlier than 1 January 2027.
• In the interim, existing transitional measures and grandfathering options continue to provide relief for entities caught by the current FGR definition (see also our previous updates (see also our previous Update and Q&A).
• It is important to assess (i) the fund classifications in existing and new structures under these proposed rules and (ii) whether conditions for the opt-out mechanism are met.