UBO-register & the tax administration: (un)limited access?

Following the new AML legislation of 18 September 2017, a national register of ultimate beneficial owners of companies and other legal entities (the “UBO-register”) will be set up and maintained by the Treasury Administration of the FPS Finances. This register will contain, at the least, information regarding the identity of the UBO’s, as well as the nature and size of their interest.

Whereas access to the UBO-register by the tax administration was initially intended to be limited to AML situations, new draft legislation of 6 November 2017 will strongly increase the tax administration’s access to the UBO-register.

The UBO-register: obligation to report UBO’s of companies and other legal entities

As already announced (EY Law Alert, April 2017), the recent obligation to obtain and hold information with regard to UBO’s, applies to companies, non-profit organizations, foundations, trusts and legal entities comparable to fiduciaries and trusts. The entities involved are required to provide the information to the relevant authorities, who will subsequently add it to the UBO-register.

At present, an individual is considered as an UBO when he has an interest of 25% or more in the company or legal entity involved. However, negotiations are ongoing for a fifth AML-Directive, in which the abovementioned threshold would be reduced to 10%.

A specific timeline for the provision of the abovementioned information is still to be determined. Royal Decrees further detailing the functioning of the UBO-register (e.g. details regarding the information required, management of the register, verification of the information) must first be adopted before the UBO-register itself can actually be created.

Impact of the new obligation from a tax perspective

It appears from new draft legislation, further implementing the fourth AML Directive of 6 December 2016, that the UBO-register will greatly increase the tax administration’s insights into an individual’s assets and holdings and will be used by the former in the context of tax audits of high net worth taxpayers.

In the explanatory memorandum of the AML legislation of 18 September 2017 it was stated that access to the UBO-register by the tax administration is limited to the context of the AML legislation and for the purpose of preventing money laundering and countering the financing of terrorism.

However, in accordance with the new draft legislation containing, among others, amendments to Article 322 ITC92, the tax administration would be granted access to the UBO-register “in order to ensure the correct taxation”. In its advice regarding this draft legislation, the Council of State has unfortunately not made any comments on the proposed amendments to Article 322 ITC92. The request for advice regarding these amendments was considered inadmissible.

To the extent that the proposed amendments would be adopted, this new source of information, together with the automatic exchange of international financial account information and the Common Reporting Standards, will greatly increase the tax administration’s view on private wealth. Furthermore, foreign tax administrations, through the international exchange of information, will also have access to this information.

We will, of course, monitor the upcoming developments and keep you updated.