The registration in the Dutch UBO register for trusts (UBO 2) must be completed before 1 February 2023.
In my previous article on the UBO register, I explained the consequences of the ruling of the European Court of Justice of 22 November. That ruling concerned solely the public accessibility of the register. However, the legislation continues.
Since 1 November 2022, a second UBO register has come into effect. The first UBO register relates to the registration of UBOs connected to companies, foundations and associations.
The newly introduced second UBO register applies to “trusts, mutual funds and similar legal arrangements”. Registration must be completed before 1 February 2023.
WHO IS REGISTERED?
Registration is mandatory for trustees and similar administrators who live or are established in the Netherlands, or who live or are established outside the EU, but enter into a business relationship in the Netherlands on behalf of a trust (or a similar legal structure). Failure to register on time or providing incorrect information may be punished with a fine. The Tax Authorities can enforce this.
WHO MUST ARRANGE THE REGISTRATION?
The trustee must arrange the registration and is also a UBO of the trust. The register is managed by the Chamber of Commerce.
WHAT IS A TRUST?
The word or concept trust often leads to considerable confusion. In this context, the trust is meant as an Anglo-Saxon legal form. Often there is a transfer (legal ownership) of assets to a trust. The trust is managed by a trustee, who must manage the transferred assets in accordance with the conditions set by the transferor (settlor). These conditions also determine who becomes the beneficiary of the transferred assets. The beneficiaries can be natural or legal persons. The benefit can take many forms, such as, for example, a periodic payment. The settlor can remain anonymous, and this has had great appeal for (legal) persons who want to shield their assets.
For tax purposes, the treatment of a trust in the Netherlands is transparent, meaning that the contributed assets are attributed to the contributor and, upon death, to the heirs. In that sense, the newly introduced second UBO Register does not change the previous situation in terms of tax treatment. Only now it becomes visible who the settlor and/or the beneficiary is. How public this data will be, after the ruling of the European Court of Justice, remains to be seen; the near future will show.
It is absolutely clear that the establishment of the UBO Registers imposed by EU legislation was a thorn in the side of the Brexiteers and a major setback for London as a Lo(au)ndromat. Investments in real estate in London alone, with a dubious origin, are estimated at $5.8 billion, of which 40% comes from the Gulf region and approximately 20% from Russia.