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By Joe Kirwin
The European Union’s tightened company ownership transparency rules crossed the final legislative threshold May 14 when EU member states backed the measures.
The rules, among the world’s toughest, are meant to expose shell companies used for tax evasion and money laundering. Every EU member state would be required to create a national registry listing the beneficial owners of companies and trusts. The registries can be accessed by persons of “legitimate interest” including tax advocacy groups and journalists.
The registries will list individuals with a share of 25 percent or more of a company. The rules make up the fifth revision of the EU Anti-Money Laundering Directive (AMLD). EU member states will have two years to transpose the legislation into national law.
The changes were proposed in July of 2016 in the wake of the Panama Papers data leak, which revealed aggressive tax planning among wealthy individuals and companies. The approval of the changes finalizes an agreement worked out with the European Parliament over the course of 2017.
In order to close the deal, European Parliament lawmakers eventually abandoned their demands that the national ownership registries be unconditionally open to the public, that they include all trusts, and that the beneficial ownership threshold be lower than 25 percent.
The revised legislation also contains new rules for accountants and tax advisory services as they will have to report discrepancies between the information in the beneficial owner registries and the information they find through their own investigations.
Accountants and tax advisers have raised concerns about the cost of accessing the member registries. They have also questioned the accuracy of some EU member registries, which could raise liability issues, as well as the potential cost of accessing them.
The new EU company transparency law has been hailed by some advocacy groups, including Transparency International EU, as a breakthrough that should become a global standard.
But the group has also warned that it will be crucial for EU member states to ensure that administrative hurdles and delays don’t hinder access to the national registries.
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