Classic offshore companies create registers of beneficiaries en masse

What will remain of offshore companies without privacy?

If global deoffshorization, which is now gaining momentum, had its own slogan, it would sound like this: "The country should know its heroes." More and more countries are following the BEPS recommendations, joining the global exchange of tax information and taxing the owners of controlled foreign companies (CFC).

But all these efforts make sense only in a complex and in compliance with the most important point – identification and accounting of the real (beneficial) owners of companies. European countries began moving towards the creation of registers of beneficial owners (UBOs) back in 2015, but this movement was not limited to the EU, going far beyond its borders.

Eight offshore companies have pledged to make public registers of beneficiaries by 2023

One of the first countries to create an open register of beneficiaries was the United Kingdom. On the Companies House website (register of legal Entities in the UK), anyone can find information about persons with significant control – who, in fact, are the beneficiaries of companies.

But the overseas British territories, which many of us know as classic offshore (Caymans, Bermuda and many others), were in no hurry to create registers of beneficial owners, unlike Britain itself. This is quite understandable, because one of the most important criteria of an offshore company is to preserve the confidentiality of its owners.

BUT, to the great regret of many businessmen (and even more for companies specializing in offshore services), eight (not one, and not two, but 8 at once!) overseas territories of the UK will create public registers of beneficial owners of companies within the next three years, i.e. until the end of 2023.

Which offshore companies will soon lose this status? The list of these British territories includes:

• Anguilla (Anguilla)
• Bermuda (Bermuda, Bermuda)
• Caymans (Cayman Islands, Cayman Islands)
• Falklands (Falkland Islands)
• Montserrat (Montserrat)
• Pitcairn Islands (Pitcairn Islands)
• Saint Helena Island
• Ascension Island and Tristan da Cunha
• Turks and Caicos Islands

What other offshore companies have created public registers of beneficiaries?

Even earlier, before the announcement of the creation of public registries by eight offshore companies at once, two other crown territories – Gibraltar and Jersey – quietly launched the corresponding UBO registries.
Gibraltar, which created a closed register of beneficiaries in 2017, has already made it public in March 2020.

But the island of Jersey (Jersey) went a little different way. Like eight other offshore companies, it has committed to make a public register of beneficial owners by 2023. But at the same time, he is already working to improve the existing closed registry. Thus, the expanded and fully digital register of beneficiaries of companies in Jersey will contain information about companies, foundations, limited liability companies (LLC), as well as LLP partnerships (but it will not contain information about LP (limited partnership). The information will include data on all real controllers (UBOs), directors and nominee shareholders.

Is there anyone else among the British Territories who has not yet announced the creation of public registers of beneficial owners? Yes, these are the British Virgin Islands! But any entrepreneurs who decide to immediately transfer their business there should not rush to make this decision at all.

Firstly, all the trends and dynamics of offshore companies say that the BVI has no chance and soon this offshore citadel will also fall. Secondly, the BVI already has fairly strict rules for determining the tax residency of local companies. So, from June 29, 2020, the BVI counts down 6 months for submitting declarations "on substence" (confirmation of real economic presence) for all companies registered before January 1, 2019.

Where can the registers of supervisors and beneficiaries become public in the near future?

Of course, without the presence of a time machine, it is impossible to accurately answer the question of who is preparing to publicly disclose information. But some signs and actions of individual governments already give reason to think – how soon will all the "secret become clear"?

An excellent example is Singapore, which announced the centralized collection of information about the controllers of local companies.

Starting from July 30, 2020, all companies and partnerships registered in Singapore are required to submit information about their controlling persons (UBOs) to ACRA, the centralized register of companies in Singapore. Previously, registers of controlling persons were kept only by the local secretary, and information from them could be provided to government agencies upon request.

What can this mean? That Singapore, like other offshore companies (for example, Jersey or Gibraltar), is preparing to introduce public registers of beneficial owners of companies in the foreseeable future.

In addition to Singapore, reasonable suspicion falls on Luxembourg. Of course, Luxembourg already has a public register of beneficiaries of companies, but we are not talking about it now. We are talking about the creation in Luxembourg of a register (so far closed) of data on beneficiaries and founders of trusts, as well as attorneys (trusts).

Attorneys of trusts (trusts) since 2018, they have been required to collect and store information about the beneficiaries of trusts, and now failure to enter data into a centralized register will be punishable by a fine of up to 1.25 million euros.

Well, 2020 turned out to be a difficult year for many, but changes have already begun, and they are inevitable. Do you want to get confidence that your business is ready to meet the new era of global transparency and deoffshorization?

Trust the Antwort Law team of experts! If you use foreign companies (especially offshore companies) in your work, then you should not postpone preparation – start adapting your business to the new reality right now. Then it will be more expensive.