Interview Emiel Reijerse, U advisors and accountants
What are the current trends in general investments and what are the opportunities for Islamic finance to spread in Netherlands?
In 2014, foreign companies made inward investments worth 664 Billion US dollars which makes the Netherlands the 10th largest recipient of foreign investment . In 2015 there were 47% more investment projects in the Netherlands compared to 2014 . These statistics show an increasing popularity of investments into the Netherlands.
Key industries are agrifood (2nd largest exporter in the world!), information technology, chemicals, high tech systems, life science & health, creative, energy and aerospace.
The Netherlands has a Muslim population of approximately one million and has already shown interest in the Islamic Finance market. Islamic finance and Islamic mortgages have been the topic of discussion within the Dutch government and different financial institutions are interested in the development of these kind of mortgages, such as several big banks (Rabo and ABN AMRO).
For more information about the current trends in general investments in the Netherlands I refer you to my answer to your third question.
What are the preferred vehicles to invest in the country ? Any local incentives ?
There are many vehicles to invest in the Netherlands, corporate as well as non-corporate entities. The most widely used vehicle is a non-corporate structure: the FGR (Fonds voor Gemene Rekening). This FGR is created by an agreement which is often referred to as the terms and conditions between the manager, the depositary and one or more investors which obliges the manager to invest and manage the assets for the joint account of the participants. This FGR is a pooled investment vehicle which means it offers a lot of flexibility. The FGR is not bound by strict rules and is typically not subject to corporation tax and dividend withholding tax in The Netherlands. Furthermore: setting up a FGR can be done very quickly and cost-effective.
A cooperative association (Coop), a corporate legal body with excluded liability for its members, has similar advantages. The Coop is liable for corporation tax and in some case for dividend withholding tax. The members (owners) of the cooperative are not mentioned in any public register.
Furthermore, the Dutch foundation is attractive to function as ‘Al-Wakeel’ in cross-border Islamic finance transactions. Similar to the FGR and the Coop, the foundation is a legal entity without shareholders and limited liability for the investors. Due to its own board, the investors will have more influence on the investment compared to investments through a common law trust.
How do you see the developments of foreign investments? In which sector particularly ? What is the support offered by local authorities ?
On the whole the Netherlands is an excellent country to invest in for a number of reasons. It is a well-known fact that the Netherlands has a strategic coastal location with access to over 500 million consumers in western Europe and access to excellent infrastructure such as the Port of Rotterdam and Amsterdam Schiphol Airport (which was named best European airport for 2013). The Netherlands also has an excellent ICT connectivity and a workforce that is both highly educated and very internationally-orientated (a high number of Dutch citizens speak English). The fact that the Netherlands is an excellent country to invest in is easily demonstrated by looking at the development of foreign investments. More than 6,300 foreign companies have already established over 8,110 operations in the Netherlands. The Netherlands also has a lot of bilateral investments treaties, which makes the Netherlands a secure place from which to make your investments. And to top it all off: according to a survey of 2014-2015 by the World Economic Forum the Netherlands currently has the eight-best business climate in the world.
In their Global Location Trends report 2015 IBM stated that the Netherlands scores very well overall. A noteworthy point that was made out in the report was that the Netherlands scored especially well when it comes to creating new jobs due to corporations choosing to locate their corporation in the Netherlands or expanding their business in the Netherlands. Over 10.000 new jobs were created in 2014, which was a record. It is calculated that foreign investors provide 15% of Dutch employment in the private sector (about 935.310 jobs). Moreover the Netherland ranked 6th globally by average value of investment projects and Amsterdam ranks as the number 3 city globally based on number of new investment projects.
From a tax perspective investing in the Netherlands looks promising as well. It is a well-known fact that the Netherlands has one of the most extensive tax treaty networks in the world with a low corporation tax rate. Due to the participation exemption double taxation can be easily avoided and there is a favourable tax treatment for foreign-owned companies, such as no withholding taxes on interest and royalties and full or partial reduction of withholding taxes on dividend usually applies. There are also some other facilities such as several R&D facilities. For example: companies benefit from an effective tax rate of 5% for R&D income from self-developed patented intangible assets and from self-developed unpatented intangible assets if they meet specific requirements. And there are many more advantages to the Dutch tax system. It would be my pleasure to explain the specifics in more detail at any time.
The following sectors are especially noteworthy:
Agriculture and food: the Netherlands is the world’s second largest exporter of agricultural products (EUR 79.2 billion in 2013).
Chemical sector: one of the leading business sectors in the Netherlands with a turnover of EUR 57 billion in 2013.
Creative industries: among the world’s top ten in terms of trade figures, jobs and registrations of brands and patterns with an annual turnover of EUR 32.8 billion.
Energy sector: the Netherlands is a major natural gas producer and the source of advanced gas technology. the Netherlands is establishing itself as leader in green gas.
Horticulture sector: the horticulture sector is a global trendsetter and undisputed international market leader in flowers, plants, bulbs and propagation material.
Life sciences and health sector: the Netherlands ranks eighth worldwide in life sciences and health patents.
Water sector: the Netherlands is world leader in hydraulic engineering, water treatment and shipbuilding.