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Germany Introduces Stricter Beneficial Ownership Requirements
Berlin, Germany - In a move aimed at increasing transparency and combating money laundering, Germany has eliminated the notification fiction for beneficial ownership requirements. As of now, all companies in Germany must declare their ultimate beneficial owners (UBOs), even if no natural person holds more than 25% of the shares.
New Obligations for Reporting Companies
The change in legislation means that German companies are required to report their UBOs, including those who hold more than 25% of the share capital, control more than 25% of the voting rights, or exercise control in a comparable manner. This includes foreign final beneficial owners, regardless of their residential address.
Key Obligations
- Declare UBOs with more than 25% share capital
- Report UBOs controlling more than 25% of voting rights
- Identify and report individuals exercising control in a comparable manner
- Include foreign entities as UBOs, regardless of residential address
Who is Affected by the Changes?
The new regulations affect all German entities with Polish shareholders, who must now report to the Transparency Register. The definition of a UBO remains unchanged and is based on Section 3 of the GwG (German Anti-Money Laundering Act).
UBO Definition
- A natural person directly or indirectly holding more than 25% share capital
- An individual controlling more than 25% voting rights
- Someone exercising control in a comparable manner
Real Estate Ownership Obligations
The new legislation also introduces obligations regarding the notification of UBOs for foreign entities that are direct or indirect owners of German real estate. Polish shareholders who own real estate in Germany must now declare their beneficial owner to the Transparency Register, even if the acquisition took place before 1 January 2020.
Real Estate Notification Requirements
- Declare UBOs with a stake in German real estate
- Include foreign entities as UBOs, regardless of residential address
- Notify the Transparency Register for existing ownership acquired prior to 2020
Consequences of Non-Compliance
Failure to report required information to the Transparency Register can result in a fine of up to €150,000. In cases of serious, repeated or systematic violations, companies may be fined up to €1 million or twice the economic benefit of the violation.
Penalties for Non-Compliance
- Up to €150,000 for failing to report required information
- Up to €1 million in fines for serious, repeated, or systematic violations
Important Deadline
The deadline for reporting beneficial owners in the case of already existing ownership was 30 June 2023. Entrepreneurs who have not yet filed their notifications are at risk of facing penalties and should do so immediately to avoid any consequences.
Key Deadlines
- Report existing ownership by 30 June 2023
- Avoid penalties by filing notifications promptly