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Markets and Securities Services |
Netherlands
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Current Dutch bonus cap rules
The ARPFE applies to financial enterprises
(
financiële ondernemingen
) with their official
seat in the Netherlands and their subsidiaries
(including subsidiaries abroad). The definition
of “financial enterprise” is very broad and
includes banks, insurers, investment firms,
payment services providers, custodians,
premium pension institutions, AIFMs, and
managers of UCITS, among others.
Similar to CRD IV, the ARPFE has a group-wide
scope and is applicable to the whole group
of companies (including those that are not
financial) if:
• There is at least one financial enterprise
with its official seat in the Netherlands
within the group.
• And the ultimate parent company of
the group (which does not have to be a
financial enterprise) has its official seat
in the Netherlands.
The central point of the ARPFE is the 20%
bonus cap: a financial enterprise cannot pay
any person “working under its responsibility”
variable pay that exceeds 20% of the fixed pay
on an annual basis. The annual fixed pay set out
in the annual income statement (jaaropgave)
— whereby (fixed) pension contributions are
explicitly excluded — forms the basis for the
bonus cap. Consequently, even though certain
emoluments may qualify as fixed pay, such as
regular pension contributions, these may not
be taken into account when determining the
basis for the maximum bonus. It goes without
saying that this restrictive interpretation further
decreases the actual maximum bonus amount.
The 20% bonus applies to any person working
under the responsibility of the financial
enterprise. However, a number of exceptions
apply, as we list below.
• An average 20% collective bonus cap for
staff in the Netherlands whose employment
conditions are not exclusively covered by
WILL THE DUTCH IMPLEMENT
A BONUS CAP FOR AIFMS AND
MANAGERS OF UCITS?
The Netherlands is famous for windmills, tulips and, well, far-reaching
bonus caps for the financial sector. Where other EU Member States have
implemented the bonus cap in accordance with the EU Capital Requirements
Directive IV (CRD IV),
1
the Dutch have taken a broader approach with the Act
on Remuneration Policies Financial Enterprises (ARPFE), which is part of the
Dutch Financial Supervision Act,
2
and provides for a general bonus cap of
20% of fixed pay. That said, there are exceptions to the applicability of the
20% bonus cap that can be used in many cases. Unlike CRD IV, the ARPFE
applies to a broader selection of firms than just banks and investment firms
and the personnel scope is not limited to identified staff, but includes all staff.
To date, AIFMs
3
and managers of UCITS
4
are exempt from the bonus cap,
but the Dutch finance minister (and the chairman of the Euro Group
5
) Jeroen
Dijsselbloem is in the process of drafting a bill that will also include certain
AIFMs and managers of UCITS in the bonus cap. Whether the Draft Bill will also
result in an actual bill is uncertain and will among others depend on how the
Minister will respond on the comments made in the consultation process.
In this article, we will set out the main rules of the Dutch bonus cap and look
at the proposed bonus cap rules for certain AIFMs and managers of UCITS.