The lower house of the Netherlands Parliament has passed a Bill providing for the registration of beneficiaries of trusts and similar legal arrangements. The bill has been transferred to the Senate for final approval.
The Bill introduces a duty to notify the Dutch Chamber of Commerce of the ultimate beneficial owners (UBOs) of trusts and similar legal arrangements. This measure is caused by implementing the EU Fifth Anti-Money Laundering Directive (5AMLD) by the Netherlands. The Directive obliges all EU Member States to ensure the availability of beneficial ownership information for all competent authorities and, to some extent, to the general public. The data from the register will be available to any person upon payment of a prescribed fee.
A trust has the following features (as defined by the Convention on the Law Applicable to Trusts and on their Recognition) –
- trust assets are separated from the trustee’s own estate;
- title to the trust assets stands in the name of the trustee;
- the trustee has the power and the duty to manage, employ or dispose of the assets under the terms of the trust and the special duties imposed upon him by law.
Article 2(3) of the Bill defines two types of “similar legal arrangements”:
- An arrangement that meets the following characteristics:
- A fund established by agreement or a combination of agreements, without legal personality and excluding enterprises or legal entities as defined in the Trade Register Act 2007;
- The accumulation of capital by participants;
- The assets are invested or used otherwise for a joint account for the benefit of the beneficial owner(s) of the fund; or
- A legal arrangement is included in the consolidated list referred to in Article 31(10) of the 5AMLD (which includes trusts, foundations and other fiduciary arrangements existing under laws of the EU Member States).
For the purposes of the register, the following persons are considered UBOs in respect of a trust or a similar legal arrangement:
- the incorporator(s);
- the trustee(s);
- the protector(s) (if applicable);
- the beneficiaries or, if they cannot be determined, the group of persons in whose benefit the trust is mainly set up or operating;
- any other individual who by way of direct or indirect ownership or by other means exercises ultimate control over the trust.
Trusts or similar legal arrangements need to be registered if:
- The trustee of a trust is a resident or established in the Netherlands; or
- The trustee of a trust is a resident or established outside of the EU and enters into a business relationship or acquires real estate in the Netherlands on behalf of the trust.
The trustee must comply within one week after the occurrence of the event pursuant to which the obligation to register the UBO arises.
The following information will be available to the general public:
- name and type of the trust;
- date and place of its registration;
- name of the ultimate beneficiary;
- UBO’s nationality;
- UBO’s country of residence;
- UBO’s interest held in the trust.
The following information will remain non-public:
- the details of the trust;
- UBO’s taxpayer identification number;
- UBO’s residence address;
- UBO’s passport/ID copy;
- the documents confirming (i) the fact that the person is qualified as the UBO, and (ii) the nature and extent of the beneficial interest.
If it is impossible to establish the size of the interest, it is presumed that the interest is proportional to the number of beneficiaries. For example, if four persons control the trust, the register will indicate that each beneficial owner has 25%.
In some cases, information about the beneficiaries can be removed from public access. For example, if the beneficial owner is underage or incapacitated, or if the publication of the information could disclose the beneficiary who may be at risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation.
Registers of beneficiaries of trusts are expected to be operational from October 2022. From the start of the operation of the registries, the beneficiaries will have three months to fill in the required information. Failure to comply with the filing requirements for the register of beneficiaries in the Netherlands is considered an economic offence. Deliberate failure to provide the information may lead to a fine or imprisonment for up to two years.