Who really has beneficial ownership? Considerations for cross-border wealth management structures
France Johnson
K&L Gates, Charlotte
Report on ‘Who Really Has Beneficial Ownership? Anti-Abuse Provisions, CTA Updates and Other Beneficial Ownership Developments’, a session at the Wealth Management Workshop at the 25th Annual IBA/ABA US and Europe Tax Practice Trends conference in Amsterdam
Wednesday 9 April 2025
Session Chairs
Imme Kam Loyens & Loeff, Amsterdam
Jacqueline Duval Perkins Coie, New York
Speakers
Jakob Andersen Gorrissen Federspiel, Copenhagen
Daniel Bader Bär & Karrer, St. Moritz
Luis Cuesta Gómez-Acebo & Pombo, Barcelona
Wojciech Marszałkowski Wardyński & Partners, Warsaw
Emilie Lecomte SQUAIR, Paris
Devan Patrick K&L Gates, Charlotte
Introduction
The panel convened to explore the evolving landscape of beneficial ownership, particularly in the context of wealth management, tax transparency, cross-border structures and international compliance. Gathering legal experts from the United States and across Europe, the panel offered comparative insights into domestic and cross-border regulatory frameworks.
Panel discussion
Co-chairs Imme Kam and Jacqueline Duval began the panel discussion by highlighting how beneficial ownership is central to tax law and regulatory compliance, especially cross-border wealth management structures. As a fundamental concept that affects both domestic and international tax laws, beneficial ownership is particularly relevant for high net worth individuals who are often more mobile than other traditional clients. Contrasting the two concepts, Duval explained that the definition and scope of ‘beneficial ownership’ vary between taxation-based (eg, treaty benefits) and registration-based (eg, transparency laws) regimes.
Before proceeding, Devan Patrick offered an example of a registration-based regime, the US Corporate Transparency Act (CTA). Patrick noted that, effective March 2025, the CTA requires non-US entities registered to do business in the US to disclose their beneficial owners. However, the reporting requirements define beneficial owners as those with 25 per cent ownership or substantial control, which differs from definitions used for taxation-based issues involving beneficial ownership. The CTA’s latest definition of beneficial ownership significantly narrows the scope of entities subject to disclosure, reducing the projected number from approximately 46 million to approximately five million.
Opening the discussion to European perspectives, Emilie Lecomte explained that France imposes a three per cent tax on real estate assets owned by foreign entities, which requires disclosure of the ultimate beneficial owners in order to claim certain tax exemptions. The French tax authorities uphold strict reporting obligations (for example, 60 days to provide the requested information after the foreign entity is notified), and failure to comply can result in significant penalties.
Jakob Andersen highlighted that Denmark uses beneficial ownership to challenge cross-border structures lacking substance, noting that the Court of Justice of the EU’s ‘Danish cases’ from 2019 have influenced tax administrations across Europe in their approach to beneficial ownership. Despite a depth of case law, however, Andersen states that, while it is important to ‘look at the whole picture […] it really boils down to who is the taxpayer [and] who has dominion and control over payments’.
Daniel Bader remarked that the concept of beneficial ownership is linked to anti-money laundering efforts in Switzerland, where banks are required to report beneficial ownership information to foreign tax authorities in approximately 150 different countries rather than Swiss tax authorities. As Switzerland has no formal registry, it relies on a ‘punitively high’ 35 per cent withholding tax and substance tests to assess abusive practices.
On the other hand, Wojciech Marszałkowski indicated that Poland ‘famously’ has a strict approach to beneficial ownership, relying on multiple definitions in its tax laws that emphasise economic control and focus on anti-abuse measures – particularly in the context of multinational enterprises.
Luis Cuesta explained that Spanish courts require tax authorities to prove abuse, emphasising the need for procedural fairness and noting that it ‘should be at the level of the tax authorities in order to evidence or to prove that the whole structure is artificial’.
While each of the jurisdictions represented by the panel takes a different approach when defining ‘beneficial ownership’, assessing the economic activity, management and flow of funds in cross-border structures are shared considerations in each jurisdiction to determine whether beneficial ownership is valid or negated.
In closing the discussion, the panellists offered insight on demonstrating substance in the face of anti-abuse concerns. Examples included:
- adequately documenting substance on the financial statements (eg, sufficient equity on the balance sheet) and in the organisational documents (eg, describing the business purpose and delineation of control and ownership) for entities involved in the structure;
- showing ‘personal substance’ through hiring employees and establishing offices; and
- considering ‘functional substance’ for subsidiaries fulfilling other business needs that are unrelated to tax.
As discussed by the panellists, beneficial ownership is a dynamic and complex legal area. As jurisdictions enhance compliance and transparency standards, practitioners must navigate diverse domestic rules, treaties and case law to ensure effective and defensible cross-border wealth management structures.