Does the UBO register mean the end of your fiscal anonymity as a shareholder?

The Ultimate Beneficial Owners (“UBO”) register was established by the Act of 18 September 2017 on the prevention of money laundering and the financing of terrorism, and implemented the fourth European Anti-Money Laundering Directive. The general principles were further elaborated by royal decree. The text is ready, only the publication is delayed.

The objective of this register speaks for itself.  The UBO register must allow the administration to gather information about the beneficial owner of companies, trusts, foundations, NPOs (international) and legal entities established in Belgium that are comparable to fiduciaries or trusts. In this contribution, we will confine ourselves to the UBO obligations in respect of (the management of) the companies.

The companies established in Belgium concern both those with legal personality and those without. Civil-law partnerships will therefore also be subject to this identification requirement.

The start of the UBO register is planned for 1 July 2018, with a transitional period until 30 November 2018.

1. Final beneficiairies

Natural persons are considered final beneficiaries in 3 cases:

• the natural persons who directly or indirectly hold “a sufficient percentage” of the voting rights or of the shares in the company.  What is or is not considered to be a sufficient percentage must always be weighed up in actual fact. It is clear, however, that an interest (direct or indirect) of more than 25.00% of the voting rights, the shares or the capital of the company, is considered as “an indication of a sufficient percentage“.  Such persons must therefore be registered in any event as the final beneficiary of their company;

• the natural persons who have control over the company by other means (e.g. shareholder agreements);  or

• the natural persons belonging to the company’s senior management, being the persons who exercise the most decisive influence on the management of the company (e.g. the CEO or the chairman of the executive committee).

2. Information to be communicated

The Royal Decree determines which information concerning the final beneficiary must be provided by the management body of the company concerned:

• name and first name, date of birth, nationality, identification number and place of residence of the shareholder;
• the date on which he became final beneficiary;  and
• the criteria on the basis of which he is classified as a final beneficiary (direct or indirect).

The origin of the capital invested (on behalf of the final beneficiary shareholder) does not have to be disclosed, contrary to (for example) the Luxembourg registration requirement.

3. Who has access?

The UBO register is set up within the Federal Public Service Finance and, more specifically, within the General Administration of the Treasury.  This service is responsible for collecting, storing and managing the data, for monitoring and for making it available.

The fact that the register is “literally” in the hands of the tax authorities does not mean that they can consult it freely and as they see fit.  After all, the Royal Decree stipulates that “the competent authority” (including the tax administration) and “the entities subject to supervision have access to the UBO register in accordance with their obligations regarding vigilance towards clients” (including notaries, bailiffs and lawyers), to the extent that such access is legal and in accordance with the legal objective (i.e. to prevent money laundering and to combat the financing of terrorism).

4. Decision

With the UBO register, the tax administration has a new instrument in its hands to combat money laundering.  The identification, notification and information obligations with regard to the UBO register put an end to the anonymity that certain (company) vehicles could offer. In combination with the automatic exchange of bank data (“Common Reporting Standards“), the tax authorities will be able to map out cross-border structures even more.  The anonymity of the shareholdership is gradually but surely being phased out.

 

Justine Bouckaert
De Langhe Attorneys

 

Published in VOKA – “Ondernemers West-Vlaanderen”, edition 6, June 2018