2 May 2022

Trusts and funds for joint account must identify ultimate beneficial owners

Legislation introducing UBO identification requirements for trusts and funds for joint account (fondsen voor gemene rekening) will enter into force. The Implementation Decree has been published with an implementation date to follow. A UBO register kept by the Chamber of Commerce in the Netherlands is expected to become operational later this year.

Trusts with a trustee located in the Netherlands must register their UBOs in this Dutch UBO register. If a trust located outside the European Union enters into a business relationship (such as the opening of a bank account) or acquires real estate in the Netherlands, the trustee must register the trust and the UBOs of the trust with the Dutch UBO Register. Funds for joint account created under Dutch law must also enter their UBOs in this register.

Identification requirement

When the new law takes effect, the trustee of a trust will have to start collecting information on the trust's UBOs and keep this information up to date. The trust's UBOs must provide the trustee with the relevant information and documentation to enable the trustee to keep the UBO information up to date.

Managers and UBOs of funds for joint account must comply with the same requirements.

Broad UBO definition

The criteria for qualifying as a UBO of a trust or a fund for joint account are different from those that apply to legal entities. An individual qualifies as a legal entity's UBO if that individual has an interest of more than 25% in the entity. However, a lower threshold applies to beneficiaries of trusts and to participants in funds for joint account. This lower threshold combined with broader UBO criteria – see below - will generally result in more UBOs of trusts and funds for joint account being registered than those of legal entities.

Who qualifies as a UBO

Trusts

The UBOs of a trust are the settlors, trustees, protectors, individuals exercising control over the trust, and all beneficiaries. If no individual qualifies as a UBO on the basis of economic interest, the beneficiaries will be defined as a group, such as pensioners.

Where a trust's settlors, trustees and protectors are legal entities, their UBOs will also qualify as UBOs of the trust.

Funds for joint account

The UBOs of a fund for joint account are not defined, but the manager (beheerder) and the legal title holder (bewaarder) are UBOs, and all participants may be regarded as equivalent to UBOs of a trust.

An exception applies to investment funds. The participants as a group may be deemed a UBO if the fund has at least 150 participants or has offered the fund to at least 150 participants (to be outlined in the AML Ministerial Decree), and it is managed by a fund manager licensed under the Financial Markets Supervision Act.

In practice, the UBOs of the fund's manager and legal title holder (both usually legal entities) will qualify as the fund's UBOs.

What details will be registered

The following details of the trust or fund for joint account will be publicly available:

  • Name and type of the trust or fund
  • Date and place of its establishment
  • Its purpose

The following details of UBOs will be publicly available:

  • Their name
  • Their month and year of birth
  • Their country of residence and nationality
  • The percentage in the trust or fund by category to be set by governmental decree

The latter categories are: 0% up to and including 25%; 26% up to and including 50%; 51% up to and including 75%; or 76% up to and including 100%. We assume what is meant is: more than 25%, more than 50% and more than 75% respectively.

The personal details of a UBO may be excluded from general disclosure for special reasons, such as the UBO being a minor.

The UBO’s address, day of birth, place and country of birth, email address, personal identification number and ID document number, and any documents reflecting the ultimate beneficial ownership, will not be publicly available.

When registration becomes mandatory

The UBO register is expected to become operational in 2022. Registration of UBOs of trusts and funds needs to be completed within three months after implementation date.