Tag Archive: Beneficial ownership

1. Foreign Ownership Register in Australia

   11 April 2024 12:30 pm Leave a Comment

   Foreign Ownership Register in Australia – Introduction

   On 1st July 2023, Australia ushered in a comprehensive reform with the activation of the Foreign Ownership Register, under Part 7A of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA).

   This new register has absorbed and expanded upon the functionalities of previous registers maintained by the Australian Taxation Office (ATO), marking a significant shift in how foreign ownership of Australian assets is documented and regulated.

   The Consolidated Register

   The Foreign Ownership Register amalgamates several previously separate registers into a unified system.

   Notably, it encompasses the Agricultural Land Register and the Water Register, both previously under the 2015 Register of Foreign Ownership of Water or Agricultural Land Act (Cth) (Old Register Act), along with the register for foreign ownership of residential land.

   However, registers pertaining to critical infrastructure assets and foreign media ownership remain independently managed by the Cyber and Infrastructure Security Centre and the Australian Communications and Media Authority, respectively.

   Expanding the Scope of Notification

   The broadened scope under Part 7A significantly enhances the transparency around foreign investments in Australia, imposing new reporting and compliance obligations on foreign investors.

   Among the critical updates are the requirements for notifying certain acquisitions of interests in Australian entities, businesses, and all types of Australian land.

   Notification Requirements

   Acquisitions of Registrable Interests

   From 1st July 2023, foreign persons must notify acquisitions of specific interests in Australian assets, including interests in entities, businesses, and land.

   Notices for these acquisitions should be submitted within 30 days, except for registrable water interests, which have a 30-day window post-financial year-end.

   Change in Foreign Status

   If a holder of a Registrable Interest becomes a foreign person post-acquisition, notification is required.

   Changes in Registered Circumstances

   Various changes, such as disposal of interests or significant modifications in the nature of the interest, necessitate notification within 30 days, with specific provisions for registrable water interests.

   Other Key Takeaways

   • The reporting obligations introduced by the Foreign Ownership Register are primarily prospective, affecting events from 1st July 2023 onwards. However, specific conditions apply to interests acquired before this date, particularly concerning changes in registered circumstances and transitions to foreign person status post-1st July 2023.
   • Notices must be submitted via the ATO’s online platform, as detailed in the Foreign Acquisitions and Takeovers (Register Notices) Data Standard 2023 (Cth).
   • No fees are associated with the submission of notices to the Foreign Ownership Register.
   • Failure to comply with the notification timeline could result in significant civil penalties.
   • Special provisions exist for the estates of deceased foreign persons or corporations under liquidation, mandating that executors, administrators, or liquidators fulfill the notification requirements.
   • Certain exemptions apply to the notification requirement, aligning with acquisitions wholly exempt from FATA.

   Foreign Ownership Register in Australia – Conclusion

   The introduction of the Foreign Ownership Register represents a pivotal step towards greater transparency and control over foreign investments in Australia.

   By centralising and broadening the scope of reporting requirements, the Australian government aims to ensure that foreign investments are made transparently and responsibly, aligning with the national interest.

   Final thoughts

   If you have any queries on this article on the Foreign Ownership Register in Australia, or Australian tax matters in general, then please get in touch.

2. Dutch Supreme Court Clarifies Beneficial Ownership in Dividend Case

   15 March 2024 8:56 am Leave a Comment

   Dutch Supreme Court Clarifies Beneficial Ownership in Dividend Case – Introduction

   On 19 January 2024, the Dutch Supreme Court delivered a landmark decision addressing the contentious issue of beneficial ownership concerning Dutch dividend tax credits.

   This judgement overturns a prior ruling by the Court of Appeal and provides crucial guidance on the interpretation of anti-dividend stripping rules within Dutch tax law.

   Background of the Case

   The case involved a Dutch taxpayer, X BV, a subsidiary of an international banking group that held shares in Dutch companies as part of its investment portfolio.

   These shares were loaned to its indirect UK parent company and were returned to X BV’s securities account, managed by a French custodian, just before dividends were distributed.

   X BV claimed it was both the recipient and beneficial owner of these dividends, crediting the Dutch dividend tax against its corporate income tax.

   The Dutch tax authorities contested this, denying the credit based on anti-dividend stripping rules.

   Judicial Findings

   The Court of Appeal had previously determined that X BV was not the beneficial owner of the dividends due to the influence of the UK parent company over the shares and dividends.

   However, the Supreme Court found this interpretation overly broad and vague, ruling that the anti-dividend stripping rule did not apply in this context.

   It clarified that the legal owner of a dividend, who can freely dispose of it and is not acting as an agent, is generally considered the beneficial owner, except under specific circumstances outlined in anti-abuse rules.

   The Supreme Court also instructed a reevaluation of X BV’s legal ownership of the shares under French law, given the securities account’s location.

   This is essential for determining X BV’s right to credit the dividend tax.

   Implications of the Supreme Court’s Decision

   This ruling has significant implications for Dutch taxpayers and the Ministry of Finance, particularly concerning the interpretation and application of beneficial ownership and anti-abuse rules in dividend transactions. It highlights:

   • The necessity for a clear and precise definition of beneficial ownership.
   • The limitation of anti-abuse rules to specific, intended situations of abuse.
   • The importance of legal ownership in the context of dividend distributions and tax credits.

   Dutch Supreme Court Clarifies Beneficial Ownership in Dividend Case – Conclusion

   The Supreme Court’s decision offers welcome clarity on the open norm of beneficial ownership, limiting its application and enhancing legal certainty for taxpayers.

   It is a crucial development for entities engaged in similar transactions, providing a clearer path to navigate the complexities of Dutch dividend tax law.

   As of January 1, 2024, amendments to the rules on beneficial ownership have broadened the scope of specific situations of abuse and shifted the burden of proof to the taxpayer for dividend tax amounts exceeding €1,000.

   The verdict also has potential implications for ongoing tax litigation and existing investment structures, warranting a review of stock agreements and tax planning strategies.

   Final thoughts

   If you have any queries about this article on Dutch Supreme Court Clarifies Beneficial Ownership in Dividend Case, or Dutch tax matters in general, then please get in touch.

3. US: Washington Finalises Beneficial Ownership Database Access

   3 February 2024 6:30 am Leave a Comment

   US Beneficial Ownership Access – Introduction

   In a key development for corporate transparency, the Financial Crimes Enforcement Network (FinCEN) of the US government has initiated the process of receiving beneficial ownership information reports as mandated by the Corporate Transparency Act 2021.

   This strategic move aims to fortify the battle against financial crimes by ensuring clarity in company ownership structures.

   Submission Requirements and Deadlines

   Under the new framework, existing companies are provided with a one-year window to submit their reports, while newly established entities must adhere to a 90-day filing deadline post-creation or registration with FinCEN.

   The agency is entrusted with the administration and secure management of the beneficial ownership database.

   Reporting entities are required to furnish comprehensive details for each beneficial owner, including their name, date of birth, address, and a valid identification number from an approved list of documents such as a US driving license, passport, or other state or local government-issued documents, including foreign passports.

   FinCEN’s Final Rule and Access Rights

   As 2023 drew to a close, FinCEN unveiled a final rule elucidating the conditions and authorized entities eligible to access the national beneficial ownership database.

   This rule, largely based on the previous year’s draft but incorporating notable amendments, is set to progressively allow access from 20 February onwards.

   The list of entities with granted access includes federal, state, and foreign law enforcement agencies, financial institutions, regulators involved in customer due diligence processes, and the US Treasury.

   Expansion of ‘Customer Due Diligence Requirements’

   A significant enhancement in the final rule is the broadening of the ‘customer due diligence requirements’ clause.

   This expansion now covers legal obligations designed to counteract money laundering, terrorism financing, or protect the US’s national security.

   Consequently, financial institutions are empowered to integrate FinCEN’s beneficial information into their due diligence and suspicious activity monitoring and reporting mechanisms, thereby reinforcing their compliance with the Banking Secrecy Act or sanctions enforced by the US Treasury’s Office of Foreign Assets Control.

   Phased Implementation and Pilot Program

   The implementation of access to the beneficial ownership information will commence on 20 February with a pilot program aimed at key federal agency users.

   This initial phase will be followed by extending access to other federal agencies, and subsequently to state and local law enforcement agencies.

   The final rule also paves the way for financial institutions to share beneficial ownership information with employees or contract personnel outside the USA, with specific exceptions, thus addressing operational challenges for institutions with extensive international operations and compliance functions.

   Database Operation and Data Access

   While the precise operational framework of the database remains under wraps, FinCEN has clarified its stance against providing bulk data exports to authorized users.

   Instead, an application programming interface is expected to be made available, allowing these users to conduct specific queries in the database.

   US Beneficial Ownership Access – Conclusion

   This landmark regulation marks a significant stride in the US government’s ongoing efforts to enhance corporate transparency and combat financial crimes effectively.

   If you have any queries about this article on US Beneficial Ownership Access, or any other US matters, then please get in touch.