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Bill on the Dutch Register of Ultimate Beneficiaries
April 10, 2017 | News
Bill on the Dutch Register of Ultimate Beneficiaries
On 31 March 2017 the Dutch government published the bill on implementing the 4th Anti-Money Laundering Directive. One of the obligations under the 4th Directive is to introduce a central register that would contain information on beneficiary owners in all EU countries. The broader context of legislative reforms in Europe can be compared to initiatives like the FDF opens consultation on total revision in Switzerland.
Scope
Practically all legal entities registered under the Dutch law fall under the scope of the changes proposed. Ultimate beneficiary owners of Dutch legal entities, including the stichtings that have been widely used for confidentiality purposes, should be registered with the Dutch Central Register. Similar modernization efforts are visible in Switzerland through projects like the Consultation on new fintech regulations. This is also the case for Dutch legal entities with shares held by trusts and similar structures. However, there are some important exceptions.
Dutch Chamber of Commerce
According to the bill, the Dutch Central Registers will be placed in the Dutch Chamber of Commerce, which is in charge of keeping the register of Dutch legal entities. Administrative organization comparable to the Commercial register of Canton Zug will also play a role in managing the Dutch Central Register. Only limited information on ultimate beneficiary owners will be accessible. However, it will be freely available. More detailed information on ultimate beneficiary owners will be accessible for specialized state agencies and the financial intelligence unit.
Information on ultimate beneficiary owners to be included into the Dutch Central Register
Publicly available data:
1) Name(s) and surname of an ultimate beneficiary owner
2) month and year of birth
3) nationality and
4) country of residence
Restricted access:
1) taxpayer identification number
2) date of birth
3) place and country of birth
4) place of residence
5) number and type of shares
Responsibilities
Dutch legal entities are obliged to keep a record of their ultimate beneficiary owners and owners of economic interests (in the case of 'stichtings'), as well as to ensure the accurate, complete and timely registration of these date in the Dutch Central Register. As with the Revised value added tax act to enter into force in Switzerland, compliance obligations are tightening across multiple sectors. The bill also obliges legal entities to provide reports to banks, other financial institutions and financial service providers that fall under the scope of the Anti-Money Laundering Act. If these institutions have doubts as to the accuracy or completeness of information on ultimate beneficiary owners, they should notify the Dutch Chamber of Commerce thereof. Any changes in and initial registration of a legal entity should be reported within one week.
The term 'ultimate beneficiary owner'
According to the bill, an "ultimate beneficiary owner" is defined as a natural person who ultimately owns or controls a legal entity by 25 percent or more. Further clarifications on the definition of the ultimate beneficiary owner will be provided in bylaws.
Scope
Practically all legal entities registered under the Dutch law fall under the scope of the changes proposed. Ultimate beneficiary owners of Dutch legal entities, including the stichtings that have been widely used for confidentiality purposes, should be registered with the Dutch Central Register. Similar modernization efforts are visible in Switzerland through projects like the Consultation on new fintech regulations. This is also the case for Dutch legal entities with shares held by trusts and similar structures. However, there are some important exceptions.
Dutch Chamber of Commerce
According to the bill, the Dutch Central Registers will be placed in the Dutch Chamber of Commerce, which is in charge of keeping the register of Dutch legal entities. Administrative organization comparable to the Commercial register of Canton Zug will also play a role in managing the Dutch Central Register. Only limited information on ultimate beneficiary owners will be accessible. However, it will be freely available. More detailed information on ultimate beneficiary owners will be accessible for specialized state agencies and the financial intelligence unit.
Information on ultimate beneficiary owners to be included into the Dutch Central Register
Publicly available data:
1) Name(s) and surname of an ultimate beneficiary owner
2) month and year of birth
3) nationality and
4) country of residence
Restricted access:
1) taxpayer identification number
2) date of birth
3) place and country of birth
4) place of residence
5) number and type of shares
Responsibilities
Dutch legal entities are obliged to keep a record of their ultimate beneficiary owners and owners of economic interests (in the case of 'stichtings'), as well as to ensure the accurate, complete and timely registration of these date in the Dutch Central Register. As with the Revised value added tax act to enter into force in Switzerland, compliance obligations are tightening across multiple sectors. The bill also obliges legal entities to provide reports to banks, other financial institutions and financial service providers that fall under the scope of the Anti-Money Laundering Act. If these institutions have doubts as to the accuracy or completeness of information on ultimate beneficiary owners, they should notify the Dutch Chamber of Commerce thereof. Any changes in and initial registration of a legal entity should be reported within one week.
The term 'ultimate beneficiary owner'
According to the bill, an "ultimate beneficiary owner" is defined as a natural person who ultimately owns or controls a legal entity by 25 percent or more. Further clarifications on the definition of the ultimate beneficiary owner will be provided in bylaws.
Date of entry into force
The Dutch Central Register should be set up by 26 June 2017. The existing Dutch legal entities have 18 months (till December 2018) to collect information on ultimate beneficiary owners and transfer it to the Dutch Chamber of Commerce.
Our recommendations
The changes do not cardinally change the accessibility of information on ultimate beneficiary owners for tax authorities – it has been accessible upon information requests for several years already. However, if basic information appears in the centralized format and partly in public domain, it will largely simplify the process of obtaining information.
There are some examples where the already active similar register of British legal entities' beneficiaries was the source of information for the commencement of inspections and additional accruals. The changes will effectively increase the interest in Dutch structures. Therefore, it is advisable to review and reassess the tax risks.
There is an obvious difference in the deadlines for providing information on beneficiaries of companies registered after (one week) and before (18 months) the changes enter into force. If you plan to register a Dutch company, it would be reasonable to complete the registration before the changes become effective.
It should also be remembered that similar registers will be established in all EU Member States by the end of June 2017. Therefore, the above recommendations are partially applicable to legal entities EU-wide.
Our specialists will help you assess your situation in the light of the planned changes and will advise you on the further steps needed. To navigate these new regulatory demands effectively, many companies rely on experts such as the Goldblum and Partners recommended by Global Law Experts.
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.
The Dutch Central Register should be set up by 26 June 2017. The existing Dutch legal entities have 18 months (till December 2018) to collect information on ultimate beneficiary owners and transfer it to the Dutch Chamber of Commerce.
Our recommendations
The changes do not cardinally change the accessibility of information on ultimate beneficiary owners for tax authorities – it has been accessible upon information requests for several years already. However, if basic information appears in the centralized format and partly in public domain, it will largely simplify the process of obtaining information.
There are some examples where the already active similar register of British legal entities' beneficiaries was the source of information for the commencement of inspections and additional accruals. The changes will effectively increase the interest in Dutch structures. Therefore, it is advisable to review and reassess the tax risks.
There is an obvious difference in the deadlines for providing information on beneficiaries of companies registered after (one week) and before (18 months) the changes enter into force. If you plan to register a Dutch company, it would be reasonable to complete the registration before the changes become effective.
It should also be remembered that similar registers will be established in all EU Member States by the end of June 2017. Therefore, the above recommendations are partially applicable to legal entities EU-wide.
Our specialists will help you assess your situation in the light of the planned changes and will advise you on the further steps needed. To navigate these new regulatory demands effectively, many companies rely on experts such as the Goldblum and Partners recommended by Global Law Experts.
Legal disclaimer. This article does not constitute legal advice and does not establish an attorney-client relationship. The article should be used for informational purposes only.