Late last May 2024, the Dutch House of Representatives Finance Committee discussed a bill that seeks to change the definition of ‘trust office’, which falls under the Trust Offices Supervision Act 2018 (Wtt 2018).   

Per the explanatory memorandum, this bill is part of the annual cycle of changes to legislation and regulations in the financial markets sector. These include tightening and amending the Trust Offices Supervision Act 2018 (Wtt 2018), extending the prohibition on bonuses for state aid and making a number of changes to the prudential supervision of insurers to improve policyholder protection.   

This article will focus on the proposed changes to the Trust Act. Below are the bill’s key points regarding the aforementioned law.   

The key changes to Wtt 2018

Tightening the definition of “trust services” under the Wtt 2018

The amendments aim to tighten the definitions of trust services to prevent circumvention of the law. The change to the current definition of trust service (part of it includes “acting as director”) wants to tackle the law’s ambiguity.   

According to this proposed bill, the problem lies in the formulation of “on behalf of” in the current definition, which some parties interpret as a contract for services. According to this interpretation, an employment contract would ensure the service will not be provided. This interpretation results in providers with multiple companies entering into employment contracts to perform management duties and remain outside the scope of Wtt 2018, effectively avoiding regulation. In such cases, the provider technically acts as a director on behalf of a third party.   

The law has always intended to cover persons who manage companies with significant administrative tasks on behalf of a client, whether implemented under an employment contract or contract for services.   

The amendments prioritise the nature of the service provided over the form of a contract (employment or service contract) to determine whether a trust office falls within the scope of the Act.   

Per the bill, the following does not automatically qualify as “trust services”:   

• Being a director for a single entity  
• Having two jobs where administrative services are provided  
• Short-term, unpaid or one-off directorships  
• Employment contracts that provide management services   

Trust offices must keep additional service files   

Under the bill, trust offices are required to keep files detailing their services to clients. This is in relation to the prohibition of providing both trust services and tax advice, as such a setup could compromise the objectivity of the trust office when handling the client’s affairs and performing customer due diligence. This is especially true if the tax advice is already being implemented.   

In its 2020 legislative letter, the Dutch Central Bank argued for the general ban on trust offices providing trust services and tax advice to the same client. In its response, the Minister, “in principle”, favours the DNB’s wish and would work with the institution to design a measure that minimises integrity risks for trust offices.   

However, the recent bill acknowledged that the blanket ban is far-reaching because trust services are usually provided to international tax-driven structures. As an alternative, the bill proposes to obligate trust offices to keep records in file detailing:  

• Tax advice that has been obtained  
• The name of the author of the advice  
• The date of the advice  
• Whether the advice has been implemented  
• Whether the advice was given by a trust office, natural person, legal entity or a company belonging to the same group as the trust office   

The proponents of the bill argue that in this way, the supervisor can easily determine whether CDD measures have been independently executed.  

If the bill is passed, what does it mean?  

Bolder Group’s Head of Growth, Jeroen van Zanten, shares his insights on this proposal: 

“If accepted, this [bill] will dramatically change the landscape for many foreign corporations with independent directors on the boards of their local Dutch corporations as these directors (if acting as director for more than one Dutch corporation) will be subject to the same requirements as professional service providers. Foreign corporations with local Dutch subsidiaries should, therefore, follow these developments cautiously.” 

No changes have been made yet to the original bill, which can be found here.  

Click this link to read the Explanatory Memorandum to the presented proposal (in Dutch). 

Bolder Group is closely monitoring this development. Bolder’s dedicated Directorship Platform can assist and provide management and compliance solutions.  

For any questions, please reach out to your usual Bolder Group representative from our Netherlands team.  

Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third party financial, tax or legal advisory firms or corporations.