On 18 September 2017, a new anti-money-laundering law was approved, which came into effect on 16 October 2017 and which completely supersedes the anti-money-laundering law of 11 January 1993. In this article we focus on an innovation in this new law which may have a significant impact on entrepreneurs: the creation of a ‘Register of ultimate beneficial owners' ('UBO register'). Through this register, the tax authorities can gain an even better picture of what shares an individual owns.
Directors of non-listed companies, foundations, non-profit organisations, fiducies and trusts were already obliged to identify the ultimate beneficial owner(s) of their entities under the old anti-money-laundering law. Under the old law, however, they were only obliged to share this information with their service-providers who fell within the law’s scope (such as notaries, lawyers, accountants, company auditors or banks).
One of the most important innovations of the new law is its creation of a ‘Register of ultimate beneficial owners' ('UBO register') to which the directors of non-listed companies, foundations, non-profit organisations, fiducies and trusts will henceforth be required to provide information about their entity’s ultimate beneficial owner(s).
The ultimate beneficial owner is the natural person who is the ultimate owner of or has control over the company, non-profit organisation or foundation. You can find out who this is from the overview below.
The UBO register will be set up within the General Treasury Administration of the Federal Public Service for Finance, in other words the Belgian tax authorities. This means that from now on the Belgian tax authorities will gain an (almost) perfect picture of the individuals at the head of corporate groups, non-profit organisations and foundations.
However, as the ultimate beneficial owner may be identifiable via various levels of corporate groups, including via group companies or holding companies based abroad, the tax authorities can also gain a picture of what foreign companies are being used in the group structure.
Moreover, the creation of the Belgian UBO register is based on a European directive, which means that all EU Member States must also establish a UBO register. All Member States will likewise be required to give foreign tax administrations access to the register to deal with specific questions. In combination with the exchange of information on financial accounts under the so-called Common Reporting Standards (CRS), the tax authorities will thus help to identify foreign structures even better.
The parliamentary preparatory work for the new law indicates that the tax authorities may only consult the UBO register for the purposes of that law, in other words to prevent money laundering and combat the financing of terrorism. However, the draft Programme Law of 6 November 2017 states that the administration will be able to consult the UBO register 'in order to ensure that tax is levied correctly’. This would mean that, as part of a tax audit, the tax authorities can consult the UBO register in order to gather evidence.
However, the specific details of the UBO register have yet to be worked out in royal decrees, so that it remains unclear for the time being how far the tax authorities will be able to go.
Finally, it should be noted that through the UBO register, the Belgian tax authorities will now have access to an inventory of the shareholdings of the individuals who are the ultimate beneficial owners of a Belgian or international non-profit organisation or foundation. Detractors claim that this brings us one step closer to the setting up of an asset register...
How the information will be collected and further details concerning the access to and use of the data in the UBO register have yet to be set out in a royal decree, so there is nothing you need to do at present. The register is expected to be operational from June 2018.
For companies, the ultimate beneficial owners are the individuals who, directly or indirectly, hold a 'sufficient percentage' of the voting rights or shares. This is a question of fact that needs to be assessed on a case-by-case basis. However, the legislators indicate that directly or indirectly holding more than 25% of the voting rights, shares or capital of the company can be regarded as an 'indication of a sufficient percentage'.
Individuals who directly or indirectly hold a stake of 25% or more may well therefore be regarded as the ultimate beneficial owner.
If an ultimate beneficial owner of the company cannot be determined on the basis of the above definition, the ultimate beneficial owners are the individuals who control the company by other means (such as a shareholders' agreement or other construct).
If an ultimate beneficial owner cannot be determined on the basis of the second definition either, the 'senior management' are regarded as the ultimate beneficial owners. This means the leaders of the company who in practice have the most decisive influence over the management of the company (in practice often the CEO or the chair of the management committee).
The following are regarded as ultimate beneficial owners of a fiducie or trust under the new law:
The following are regarded as ultimate beneficial owners of a Belgian or international non-profit organisation or foundation under the new law: