The implementation of a Trust register is one of the measures that is included in the (amended) fourth EU Anti-Money Laundering Directive (Directive). The Trust register will be administered as a separate register by the Dutch Chamber of Commerce.
In this newsletter we set out the main aspects of the legislative proposal for the implementation of the Trust register. The Trust register will exist in addition to the UBO-register for Dutch corporate entities and other legal entities. For more information on the UBO-register for corporate entities and other legal entities we refer to our Quoted ‘The Dutch UBO-register for corporate and other legal entities’.
Which legal arrangements fall under the scope of the Trust register?
Based on the legislative proposal, the Trust register is applicable to (i) trusts and (ii) similar legal arrangements.
The trust originates in Common law and is, in short, a legal relationship under which assets have been placed under the control of a trustee, who manages those assets in accordance with the terms of the trust for the benefit of one or more beneficiaries or for a specific purpose. Trusts can be used for business reasons, family affairs or for cultural and charitable purposes.
Similar legal arrangements
Each Member State of the European Union (EU) has determined which legal arrangements under its domestic laws are considered to be similar to a trust. The Dutch Trust register also applies to those legal arrangements.
The Netherlands has qualified certain funds without legal personality as legal arrangement similar to trusts. The most common example of a fund that falls under the scope of the Trust register is the Dutch mutual fund (fonds voor gemene rekening). It is irrelevant whether the mutual fund qualifies as transparent or opaque for tax purposes.
If an entity must be registered in the Dutch Trade Register, that entity shall not qualify as a legal arrangement similar to a trust, even though the entity has characteristics similar to a legal arrangement.
Who is subject to registration?
The obligation to obtain, hold and register information in the Trust register is imposed on the trustee of a trust, or the person fulfilling a comparable position for a similar legal arrangement (the trustee). In case of a mutual fund, the manager of that fund will generally be considered the ‘trustee’.
Not every trustee of a trust or similar legal arrangement (hereafter: trust) is obliged to register information in the Trust register. The registration requirements are applicable to a trustee that:
- resides or is established in the Netherlands; or
- resides or is established outside the EU and acquires Dutch real estate on behalf of the trust or enters into a business relationship in the Netherlands on behalf of the trust with an obliged entity. Examples of such business relationships are a business or commercial relationship with a financial institution such as a bank, an accountant, lawyer, civil-law notary or tax adviser.
Trusts are not subject to the registration requirements in the Netherlands if the trust and its UBOs are registered in a Trust register of another Member State of the EU.
Who is UBO?
In the Dutch Anti Money Laundering and Terrorism Financing Decree 2018 (Decree) it is defined which individuals must in any event be registered as UBO for trusts or similar legal arrangements. The enumeration is not exhaustive.
The following individuals must in any event be considered a UBO of a trust:
- the settlor(s);
- the trustee(s);
- the protector(s), if applicable;
- the beneficiaries, or if no individual beneficiaries can be determined, the group of individuals in whose interest the trust is principally established or active; and
- any other individual who through direct or indirect ownership interest or through other means can ultimately exercise control over the trust.
Contrary to the ‘regular’ UBO-register, no indicative minimum percentage is included in the UBO definition for trusts. It is therefore not necessary that an (ownership)interest of more than 25% exists; with an interest of less than 25% an individual can already qualify as UBO.
If it is not possible to determine the individual beneficiary, for example because the beneficiary can only be determined in the future, then the group of individuals should be described accurately on the basis of specific characteristics or per category so that upon distribution or if the specific rights of a beneficiary can be determined, the trustee can proceed with updating the information in the Trust register.
What information will be registered?
Trustees must register information in the Trust register for every trust. Upon registration, a unique reference number is assigned to the trust, which must be included in all written statements made on behalf of the trust. The UBO will be informed about the registration through an automatic process.
Part of the registered information will be publicly accessible through the Trust register. Another part of the information is only accessible to certain competent authorities and the Financial Intelligence Unit.
Publicly accessible UBO-information
concerning the trust:
- Name and type;
- Date and place of establishment;
with respect to each UBO:
- Surname and last name;
- Month and year of birth;
- Country of residence; and
- Nature and size of the beneficial interest held.
Not publicly accessible UBO-information
concerning the trust:
- Documentation supporting the information concerning the trust.
with respect to each UBO:
- Citizen Service Number (Burgerservicenummer, ‘BSN’ / foreign tax identification number (TIN);
- Date of birth;
- Place of birth
- Email address;
- Copy of passport / ID;
- Documentation supporting (i) the conclusion that the individual qualifies as UBO and (ii) the nature and size of the beneficial interest held; and
- Documentation confirming the information concerning the UBO.
If a UBO has no beneficial interest regarding the trust, but for example solely has voting rights, this could be indicated upon registration. The Trust register will be set up accordingly.
In cases where the size of the beneficial interest of the UBO is still unclear or uncertain, the trustee will have to determine on a case by case basis whether there is enough information available to determine the range of the nature and size of the beneficial interest held. If this is not possible, the notification that the beneficial interest cannot be specified will suffice.
The UBO-information will remain accessible for a period ending ten years after the grounds for the registration of such information ceases to exist.
Can UBO-information be shielded?
Based on the Directive, Member States may provide for public access to UBO-information to be shielded, on a case-by-case basis, if the UBO is a minor or legally incapable, or if the publication of UBO-information would expose the UBO to a disproportionate risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation.
In the Netherlands, the UBO-information of a minor or person who is legally incapable will be shielded. In other cases, UBO-information will only be shielded if a UBO is under “police protection”: this is the case if a UBO is under the protection of the Public Prosecutor or the National Coordinator for Counterterrorism and Security. The grounds for the shielding of information in the Trust register are equal to the grounds of the ‘regular’ UBO-register.
When does the Trust register enter into force?
Based on the Directive, the Trust register should have been implemented on 10 March 2020. The Netherlands did not achieve the deadline. It is not known when the Trust register will enter into force. This is amongst other things depending on the legislative process. After entering into force, trustees will have 3 months to register the UBOs of trusts. After this transition period, trustees must comply with the registration requirements within one week. Changes of the UBO must also be registered within one week after occurrence.
Which other requirements apply?
Competent authorities and obliged entities will be required to report to the Chamber of Commerce any discrepancy between the information included on a trust in the Trust register and the information available to them. The competent authorities only have to report the discrepancy if appropriate and to the extent that this requirement does not interfere with their duties.
Violation of above mentioned obligations is considered an economic offence which can be sanctioned by criminal or administrative sanctions. Furthermore, a penalty for noncompliance may be imposed as a ‘remedial sanction’. If the violation was intended then the criminal sanctions could include imprisonment for a maximum period of two years, a community punishment or an administrative fine.
Do you have any questions about the Trust register? Maybe an informal introductory meeting would be of interest? Please contact your Loyens & Loeff adviser or get in touch with one of our dedicated advisers in the Family Owned Business & Private Wealth department.
Although this publication has been complied with great care, Loyens & Loeff N.V. and all other entities, partnerships, persons and practices trading under the name ‘Loyens & Loeff’, cannot accept any liability for the consequences of making use of this issue without their cooperation. The information provided is intended as general information and cannot be regarded as advice.