Supreme Court on single investor Sondervermögen

The Dutch Supreme Court issued a ruling on the Dutch tax treatment of a German Sondervermögen with a single investor. The case is relevant for funds that claim refunds of Dutch dividend withholding tax. The EU law questions on the matter remain unanswered pending a final decision by the ECJ in case C-156/17 (Köln Aktienfonds).

The Supreme Court judgement contains rules for the Dutch classification of foreign entities such as the Sondervermögen:
– The qualification as a fund for mutual account (fonds voor gemene rekening, “FGR”) requires mutual investment in substance.
– If an entity has issued participating interests, it does not qualify as a non-transparent trust (doelvermogen).

It seems likely that the court will consider a German Sondervermögen set up for a single investor that holds the participating interests as tax transparent for Dutch purposes.

Finally, the Supreme Court rules that a request for a refund of Dutch dividend withholding tax should be rejected if the request was filed by or on behalf of a fiscally transparent fund. The participants should be the applicants.