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14 July 2020 / news

New Trusts Register in Luxembourg: Action required for foreign and local trustees

The new Trusts Register Law now requires fiducies and trusts to provide identification about the ultimate beneficial owner, whether or not the trustee is established in Luxembourg. The scope is wider than other registration schemes and there are penalties for non-compliance.

Trustees-register-UBO-Luxembourg-handwriting

Following the creation of the Luxembourg UBO Register of companies and other corporate entities under the UBO Register Law, affected entities had until 30 November 2019 to file their UBO information with the Luxembourg UBO Register (Registre des Bénéficiaires Effectifs or RBE). 

Seven months later, as part of AMLD 4/AMLD 5 implementation another register is now taking shape: the “Register of Fiducies and Trusts”. 

On 10 July 2020, the law creating a register of Fiducies and Trusts (the Trusts Register Law) was published. This repeals the law of 10 August 2018 on information to be obtained and kept by the trustees. Certain provisions are common to both registers, but there are differences worth highlighting.

Interested in the new requirements but need a little more background about trusts? Check out the definition box at the bottom of the article!

1. Entities in Scope

While the UBO Register Law is aimed at all Luxembourg entities registered with the RCS, except natural persons registered as merchants, the Trusts Register Law applies to:

  • Any fiducie and any express trust with a fiduciaire, or a trustee which is established, or is a resident in Luxembourg.
  • Any fiducie or express trust where the fiduciaires or trustees are not established either in Luxembourg or in another Member State. These must be entered into the Trusts Register if the fiduciaire or the trustee, in the name of the fiducie or the trust, establishes a business relationship with a professional or acquires a property that is located in Luxembourg.

2. Identification of the UBO

The AML Law uses the following definition of “Beneficial owner” for both types of entities (i.e. companies and trusts): “any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted.”

However, the determination of the UBO(s) is much more complex in the case of fiducies and trusts, as all the following persons must be included in the filing:

  • the settlor(s);
  • the fiduciaire(s) or trustee(s);
  • the protector(s), if any;
  • the beneficiaries, or the class of beneficiaries;
  • any other natural person exercising ultimate control over the fiducie or trust by means of direct or indirect ownership or by other means.

3. Type of UBO information to be filed

a. For natural persons, the same UBO information as for corporate and other legal entities under the UBO Register Law applies to the UBO information for fiducies and trusts under the Trusts Register Law:

  • first and last name;
  • nationality(ies);
  • date of birth (day, month and year); place of birth;
  • country of residence;
  • full private or professional address;
  • identification number for individuals registered in the Luxembourg Register of natural persons (or for non-resident individuals their national identification number); and
  • nature and the extent of the effective interests held.

b. For legal persons registered in accordance with Article 30 of AMLD 4 (i.e. corporate or other legal entities filed in the RBE), the Trusts Register Law requires the following additional information be filed:

  • name of the legal person and, where applicable, the abbreviation and commercial sign used;
  • exact address of legal person’s registered office;

if it is:

      > for a legal person registered with the Trade and Companies Register of the Grand Duchy of Luxembourg, the registration number is required;
      > for a legal person not registered with the Grand Duchy of Luxembourg Commercial and Companies Register, if applicable, the name of the register in which the legal person is registered and the registration number in the register is required if the legislation of the State to which they are registered provides for such a number.

  • nature of the concerned person’s involvement in the trust or in the express trust and extent of the actual interests held.

This refers to the information of legal persons having the status of settlor, fiduciaire/trustee, protector or beneficiary.

4. Access to UBO information

While in both registers, national authorities and professionals have access to all the information listed in 3 (a) above, there are two main differences in relation to:

Self-Regulated bodies

The Trusts Register Law explicitly indicates that, by the virtue of their anti-money laundering supervision obligations, they have access to all the information referred to in item 3 above and filed in the Trusts Register. Conversely, there is no privileged access right under the UBO Register Law.

Legitimate interest

Whereas any person may access almost all the information listed in item 3 (a) above in the RBE (except the exact private or professional address and identification number of the UBOs) under the UBO Register Law, the Trusts Register Law requires the demonstration of a legitimate interest for any natural or legal person to access the Trusts Register’s information.

Certain information not accessible

In both cases (i.e. UBO Register and Trusts Register), the person may access all the information listed in item 3 (a) above, except the exact private or professional address and identification number of the UBOs. Under the Trusts Register, dates and places of birth of natural persons are not accessible.

5. EU Coordination

Under the Trusts Register Law, the Luxembourg Registration Duties, Estates and VAT Authority (Administration de l’enregistrement, des domaines et de la TVA) can take the necessary measures needed to ensure the interconnection of the Luxembourg Trusts Register with the other EU trusts registers. This will allow competent authorities, financial intelligence units and other entities to identify the beneficial owners easily and efficiently, increasing the transparency requirements on companies and trusts. It will also allow the public to access EU-wide beneficial ownership information.

The UBO Register Law does not authorise a similar EU coordination ability for company information.

6. Sanctions

Persons responsible

Whereas the UBO Register Law distinguishes between breaches that are committed either by registered entities or by a UBO, the Trusts Register Law only targets the fiduciaires/trustees, as well as members of their management bodies, their effective managers or other responsible persons.

The Trusts Register Law also sanctions any natural or legal person who uses information inappropriately.

Nature of sanctions

While only a criminal fine may be imposed for companies under the UBO Register Law, ranging from EUR 1,250 to EUR 1,250,000, administrative sanctions are more gradual with respect to the trustees and fiduciaires under the Trusts Register Law:

  • a warning;
  • a reprimand;
  • “name and shame” publications;
  • administrative fines up to twice the amount of the benefit from the violation, where it can be determined, or a maximum amount of 1,250,000 euros.

7. Recourse

Appeal against a decision to register or to refuse UBO information registration in the RBE

While the UBO Register Law provides for an appeal against the decision to register or to refuse registration, no such appeal right exists under the Trusts Register Law.  UBO appeals may be brought before a magistrate presiding over the chamber of the district court sitting in commercial matters for merchants and before the president of the district court sitting in civil matters for other cases.

AED decisions related to the Trusts Register

Decisions of the AED may be appealed within one month to Luxembourg administrative court.

 

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Definitions

  • Fiducie: a fiduciary contract subject to the law of 27 July 2003 on trust and fiduciary contracts, as amended.

 

  • Fiduciary contract: a contract by which a person, the fiduciant, agrees with another person, the fiduciary, that, subject to the obligations determined by the parties, the fiduciary becomes the owner of assets which shall form the fiduciary property

 

  • Fiduciaire: A person who, within a fiducie, and under the obligations determined by the parties, becomes the owner of the property forming the “fiduciaire” estate.

 

 

The term "trust" refers to the legal relationships created – inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose. A trust has the following characteristics:

a) the assets constitute a separate fund and are not a part of the trustee's own estate;

b) title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee;

c) the trustee has the power and the duty, in respect of which he/she is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him/her by law.

 

  • Express Trust: a trust clearly established by the settlor, usually by means of a document such as a written act of creation of the trust. This type of trust is different from the trusts resulting from the effect of the law and which do not result from the intention or a clear decision of a settlor to create a trust or similar legal construction.

 

  • Self-regulated Body: A body, composed of members of a profession it represents, that has a role in regulating them, in performing certain supervisory or monitoring type functions and in ensuring the enforcement of the rules relating to them. It includes for example, accountants lawyers, notaries and bailiffs.

 

  • AED : Administration de l’enregistrement, des domaines et de la TVA (Luxembourg Registration Duties, Estates and VAT Authority).

 

 



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