In fund structuring, regulation and investor preferences often define the route, but not all roads lead to the same level of complexity. For smaller and emerging managers in Europe, sub-threshold funds offer a more efficient, lower-cost path to market. While Luxembourg remains a key jurisdiction for many fund managers, the Netherlands is increasingly gaining attention, offering lean compliance pathways, cost-efficient structures, and a supportive local ecosystem that appeals to emerging and sub-threshold managers.
At Taru, we are seeing a sharp rise in interest for sub-threshold structures, especially among private equity, venture capital, and niche investment strategies. Here is what fund managers need to know.
What Is a Sub-Threshold Alternative Investment Fund Manager (AIFM)?
Under the EU’s Alternative Investment Fund Managers Directive (AIFMD), fund managers must typically comply with full regulatory requirements — including licensing, depositaries, capital minimums, and extensive reporting.
However, if the total Assets Under Management (AUM) managed by an AIFM keeps below certain thresholds, a lighter regulatory regime applies.
To qualify as a sub-threshold AIFM, a manager must:
- Manage less than €100 million in assets (if using leverage), or
- Manage less than €500 million (if unleveraged and with a 5-year lock-in period)
Sub-threshold managers do not need a full AIFMD license, are exempt from appointing a depositary, and benefit from simplified reporting requirements. They must register with the local regulator and disclose only basic fund data on an annual basis, whereas a licensed AIFM is subjected to periodic reporting requirements and needs to disclose more information. To provide clear insight into the difference when it comes to AIFMD reporting to the Authority for the Financial Markets (AFM) in the Netherlands, consider that a sub-threshold manager (or light regime manager) has the following reporting obligations:
- Submission of the manager’s annual AIFMD report
- Submission of the annual AIFMD report of AIFs under management
In comparison, when a Dutch AIFM has an AFM license, the following reporting obligations apply:
- Submission of annual report of the AIFs under management
- Submission of the manager’s annual report when offering to non-professional investors
- Submission of half-yearly figures of the AIFs under management and the manager when offering to non-professional investors
- Submission of the manager’s periodic AIFMD reporting
- Submission of the periodic AIFMD reporting of the AIFs under management
Why the Netherlands Stands Out
The Netherlands is becoming an increasingly attractive option for fund managers, and here is why:
True Light-Touch Regulation
In the Netherlands, sub-threshold status means exactly what it should — a genuine reduction in regulatory burden. Managers can benefit from a simplified regime: no license requirement, no need for a depositary, and no mandatory ManCo. This creates space for emerging funds to launch and operate with greater agility and speed.
Cost Efficiency
This streamlined setup naturally leads to lower operational costs. For smaller or first-time managers, these savings can be significant, especially during early-stage fundraising. Based on industry insights and our experience supporting clients, launching a sub-threshold fund in the Netherlands offers a highly cost-effective path to market.
Rapid Growth in Sub-threshold Funds
According to the Netherlands Authority for the Financial Markets (AFM), the number of AIFM-light managers has grown by nearly 50% over the past five years, reaching 747 registered managers. Among this expanding group, a notable share of international investment managers have chosen the Netherlands as the domicile for their sub-threshold funds, including firms from Poland, the United Kingdom, Turkey, Germany, and many other countries. This surge highlights the sector’s increasing appeal, particularly among private equity players and international investor groups.
The Dutch fund ecosystem continues to mature. With support from experienced fund administrators and legal advisors, fund managers launching in the Netherlands gain access to a robust and responsive platform — one that is ready to scale with them.
This growing ecosystem is further supported by the Netherlands’ position as one of Europe’s top largest investment fund markets. Based on the 2024 market report from the AFM, the total AUM of sub-threshold fund managers in the Netherlands grew by 79% between 2019 and 2023, increasing from €14.6 billion to €25.8 billion. Over the same period, the net asset value (NAV) of these managers rose by 78%, reflecting both expansion in the number of funds and growth in average fund size.
AIFMD Decision Guide: Which Path Fits?
The decision between a full license and a sub-threshold structure depends on more than just AUM. Fund managers should consider:
- Whether they need a marketing passport (full license), what is the composition of the investor base?
- Whether they qualify for a EuVECA label (A light regulatory framework that comes with a marketing passport )
- Whether their fund has the risk infrastructure to meet full license standards
- How their long-term goals align with licensing benefits
The EuVECA Advantage
One common challenge for sub-threshold funds is limited marketing reach. Without an AIFMD license, EU-wide marketing requires navigating individual national private placement regimes, often time-consuming and inconsistent.
That is where the EuVECA (European Venture Capital Fund) label comes in. This optional designation allows smaller funds to access a pan-EU marketing passport without needing a full license.
To qualify, funds must:
- Stay under €500 million AUM
- Invest 70% or more in unlisted SMEs
- Not use leverage
- Register with the local authority and meet basic transparency rules
For VC and growth equity strategies, EuVECA is a smart regulatory bridge, combining access with efficiency
How TARU Supports Fund Launches
Choosing the right fund structure is about more than ticking regulatory boxes — it is about building a foundation that aligns with your goals. With the right guidance, it is possible to navigate these choices confidently, ensuring that structure supports strategy, not the other way around.
At Taru, we have experience supporting sub-threshold and fully licensed funds. We offer fund administration services from the Netherlands and Luxembourg*, built on forward-focused technology and exceptional client service. We are a team of fund administration specialists passionate about redefining fund administration, backed by a reputable, independent, and global firm. To learn more, visit taru.com or get in touch with our team.
*pending CSSF licence
