Virginia, US
The second permit for Wealthy Foreign Nationals has been issued in the Netherlands, to an Asian investor who made use of the option to invest in a seed fund. This will be encouraging news for the Dutch authorities, who have been tweaking the program since its introduction in 2013 in an attempt to make it more attractive to foreign High Net Worth Individuals. The most recent round of changes were implemented on 1 July 2016, in reaction to the very underwhelming response to the permit thus far.
The Dutch program requires a qualifying investment of at least € 1.25 million, which can be invested in any of the following ways:
- Directly in an innovative Dutch company;
- A contractual joint venture that invests in one or more innovative companies;
- A participation fund affiliated with the Netherlands Venture Capital Association (NVP); or
- A seed fund recognized by the Minister of Economic Affairs.
The investment must be beneficial to the Dutch economy. Opting to invest in a recognized seed fund or participation fund will per se satisfy the requirement to benefit the Dutch economy and this is the route that we find most advisable, as it offers greater certainly for the investor. Investing in a Dutch company or group of companies is less transparent for the investor, as the “benefit” of the investment must be assessed by an arm of the Dutch Ministry of Economic Affairs using a points system.
That said, the new changes will open the option of investing in a Dutch company or a group of companies to more applicants, as it is no longer required in all instances to invest in an innovative company. Under the new criteria, the subjective “innovative” requirement can be avoided by the creation of 10 full-time jobs in the Netherlands within five years after making the investment. This is an excellent development, as the necessity to be innovative was a barrier that made the Dutch permit quite unappealing to High Net Worth investors. Fragomen, along with potential investors themselves, informed the authorities that the innovation requirement was a deterrent to otherwise desirable applicants and we are very pleased that the authorities have taken this feedback into consideration.
Also as per 1 July, the investor’s permit will have a duration of three years, up from one year, in response to criticism that a one-year permit did not provide nearly enough stability for the investor, particularly given the hefty investment amount of € 1.25 million. Finally, the requirement to submit a satisfactory report from an account, certifying that the investment funds were not obtained illegally, has been removed. The accountants report had become a significant administrative barrier, as many accountancy firms were not willing to accept liability for producing such a report.
In a meeting with the immigration decision maker charged with reviewing investor applications and the representative of the Ministry of Economic Affairs held last week, we were able to have an open dialogue about how applications will now be processed, about the ambitions of the Dutch government to make the program more successful and were impressed that the Dutch authorities were open to constructive criticism of the permit criteria.
While restrictions on dual nationality and the Dutch language requirement for Permanent Residency will limit the appeal of this program to many HNWI’s, I am encouraged by the willingness of the Dutch authorities to make changes to the permit criteria in response to feedback from investors and advisors. I hope, along with the authorities, that improvements translate to an increase in applications and Investor permits awarded.
You can find more information about the Dutch investor’s Permit and the latest round of changes here and here, or you can contact me directly at christine.sullivan@fragomen.com to learn about investment based residence and citizenship options in the Netherlands and throughout the world.