As a founder of a Dutch company, you’ve likely encountered the term “UBO” during your business journey. But what exactly is a UBO, and why is it crucial for your company to report UBO details? At House of Companies, we’re committed to demystifying these regulatory requirements, ensuring you can navigate them with confidence and compliance.
What is a UBO?
UBO stands for Ultimate Beneficial Owner. In essence, a UBO is any natural person who ultimately owns or controls a company. But let’s break this down further:
Ultimate: The person at the end of the ownership chain.
Beneficial: The person who enjoys the benefits of ownership, even if the asset is in someone else’s name.
Owner: The person who has a significant level of control or ownership in the company.
In the Netherlands, a person is considered a UBO if they:
Hold more than 25% of the shares in the company
Can exercise more than 25% of the voting rights
Have the right to appoint or dismiss the majority of the board members
Can exercise effective control over the company through other means
Scenarios: Who Qualifies as a UBO?
To better understand who might be considered a UBO, let’s explore four different scenarios:
Scenario 1: The Majority Shareholder
Meet Anna: Anna owns 60% of the shares in TechInnovate BV, a Dutch tech startup. She’s actively involved in the company’s strategic decisions.
UBO Status: Anna is clearly a UBO. She owns more than 25% of the shares and has significant voting rights, giving her substantial control over the company.
Reporting Requirement: TechInnovate BV must report Anna as a UBO, including details of her 60% shareholding.
Scenario 2: The Influential Minority Shareholder
Meet Bart: Bart owns 20% of shares in GreenEnergy BV. While this is below the 25% threshold, Bart has been granted special voting rights in the company’s articles of association, allowing him to veto major company decisions.
UBO Status: Despite owning less than 25% of shares, Bart is considered a UBO due to his ability to exercise effective control through his special voting rights.
Reporting Requirement: GreenEnergy BV must report Bart as a UBO, detailing both his shareholding and his special voting rights.
Scenario 3: The Silent Partner
Meet Carla: Carla doesn’t own any shares in FashionForward BV, but she has provided a significant loan to the company. The loan agreement gives Carla the right to appoint three out of five board members.
UBO Status: Carla qualifies as a UBO. Although she doesn’t own shares, she can exercise control by appointing the majority of the board members.
Reporting Requirement: FashionForward BV must report Carla as a UBO, explaining her ability to appoint board members as the basis for her UBO status.
Scenario 4: The Complex Ownership Structure
Meet David: David owns 100% of HoldCo BV, which in turn owns 30% of shares in DutchTrade BV. HoldCo BV is the largest shareholder of DutchTrade BV.
UBO Status: David is considered the UBO of DutchTrade BV. Although he doesn’t directly own shares in DutchTrade BV, he indirectly controls more than 25% of the company through his ownership of HoldCo BV.
Reporting Requirement: DutchTrade BV must report David as a UBO, detailing the ownership structure through which he exercises control.
These scenarios illustrate that UBO status isn’t always straightforward. It’s not just about direct shareholding, but also about voting rights, ability to appoint board members, and indirect control through other companies or agreements.
Why Does Your Dutch Company Need to Report UBO Details?
The requirement for UBO reporting stems from both national and EU-wide efforts to combat financial crimes such as money laundering and terrorist financing. Here’s why it’s crucial:
Transparency: UBO reporting increases transparency in corporate structures, making it harder for illicit activities to hide behind complex ownership arrangements.
Anti-Money Laundering (AML): It’s a key tool in the fight against money laundering, helping authorities trace funds back to their true source.
Combating Tax Evasion: UBO information helps tax authorities ensure that the right amount of tax is being paid by the right entities.
Due Diligence: It aids financial institutions and other businesses in conducting proper due diligence on their clients and partners.
EU Compliance: The Netherlands, as an EU member state, is required to maintain a UBO register as part of the EU’s Anti-Money Laundering Directives.
What Information Needs to Be Reported?
When registering your UBO(s), you’ll need to provide the following information:
Full name
Date, place, and country of birth
Nationality
Residential address
BSN (Dutch citizen service number) or foreign tax identification number
Nature and extent of the beneficial interest held
Additionally, you’ll need to submit supporting documents that prove the UBO’s identity and the extent of their beneficial interest.
When and How to Report UBO Information
All Dutch legal entities, including BVs (private limited companies), are required to register their UBOs. Here’s what you need to know:
New Companies: Must register UBO information within one week of incorporation.
Existing Companies: Had to register their UBOs by 27 March 2022.
Changes: Any changes in UBO information must be reported within one week of the change occurring.
Registration is done through the Dutch Chamber of Commerce (KvK). At House of Companies, our eBranch portal simplifies this process, guiding you through each step and ensuring you remain compliant.
Consequences of Non-Compliance
Failing to register UBO information or providing incorrect information can lead to serious consequences:
Fines of up to €21,750
Potential criminal prosecution in cases of deliberate non-compliance
Reputational damage and difficulties in business relationships
Privacy Concerns: What You Need to Know
While transparency is the goal, the Dutch UBO register also considers privacy concerns:
Only a portion of the UBO information is publicly accessible.
Sensitive details like BSN numbers and residential addresses are not made public.
In exceptional cases, where public access would expose the UBO to disproportionate risk, access can be restricted.
How House of Companies Can Help
Navigating UBO reporting requirements can be complex, especially for international founders. That’s where we come in:
Expert Guidance: Our team stays up-to-date with the latest UBO regulations, ensuring your compliance.
Streamlined Registration: Our eBranch portal simplifies the UBO registration process, making it quick and error-free.
Ongoing Compliance: We help you stay on top of any changes that need to be reported, setting up reminders and alerts.
Privacy Protection: We advise on best practices to protect your privacy while meeting regulatory requirements.
Multilingual Support: Navigate UBO reporting in your preferred language, with accurate Dutch translations provided where necessary.
Conclusion: Embracing Transparency for Business Success
Understanding and complying with UBO reporting requirements is more than just a legal obligation – it’s a step towards building a trustworthy and transparent business environment. By accurately reporting your UBO information, you’re contributing to a safer financial system and positioning your company as a responsible player in the Dutch and global markets.
At House of Companies, we’re committed to making this process as smooth as possible for you. Let us handle the complexities of UBO reporting, so you can focus on what you do best – growing your business.
Ready to ensure your Dutch company is fully compliant with UBO regulations? Visit our eBranch portal today and take the first step towards effortless UBO reporting and management!