Major EU economies commit to automatic exchange of company beneficial ownership details

Heather Self of Pinsent Masons, the law firm behind Out-Law.com, was commenting as finance ministers from the so-called 'G5' economies wrote to their colleagues in the G20 urging them to adopt the same measures. The announcement was described as "ground-breaking" by UK chancellor George Osborne, who said that it would ultimately make it more difficult for firms to "dodge tax or funnel corrupt funds".

Speaking on BBC Radio 5 Live's 'Wake Up to Money' programme, Self said that what stood out about the announcement was the fact that company beneficial ownership registers and planned new registers of trusts would be exchanged automatically between the participating states.

"This is a significant step in what has been an increasingly accelerated trend, going back two and a half years to the 2013 G20 meeting in St Petersburg," she said.

"The UK is just starting up its own company register and has agreed to make that public – which isn't common among all the participating countries. The principle of these registers is already in place, but now five major EU economies are going to automatically exchange that information," she said.

The plans were announced at an International Monetary Fund (IMF) meeting in Washington DC. According to the G5 finance ministers' letter, beneficial ownership information relating to "companies, trusts, foundations, shell companies and other relevant entities and arrangements" will be exchanged "in a fully searchable format" and will include "information on entities and arrangements closed during the relevant year".

The exchange will initially operate as a pilot, during which participating economies will explore the best way to exchange this information with a view towards ultimately developing a "truly global common standard". This work should be led by the global Organisation for Economic Cooperation and Development (OECD), alongside the Financial Action Task Force. Ultimately, the system should develop into one of "interlinked registries containing full beneficial ownership information", according to the letter.

The OECD has already developed a common reporting standard (CRS), through which more than 90 countries will automatically exchange financial account information with other jurisdictions on an annual basis. The first exchanges by 'early adopters', which include the UK and its overseas territories and Crown Dependencies, will take place in 2017 with more countries due to begin participating in 2018.

Since 6 April, UK companies and limited partnerships have been obliged to keep a register of 'people with significant control' (PSCs). PSCs are individuals who hold more than 25% of a company's shares or voting rights, have the right to appoint a majority of directors or have the right to exercise, or actually exercise, significant influence or control over the company. Companies will have to supply the information to Companies House from 30 June 2016 when they file the company's confirmation statement - the replacement for the annual return. A company's PSC register can be inspected free of charge by those with a 'proper purpose' and most of the information supplied to Companies House will be publicly available 

Other major economies have committed to introducing similar registers which will be accessible to 'competent authorities' and other limited categories of people with a legitimate interest in accessing the information.

UK chancellor George Osborne said that the G5 countries were "setting the pace on beneficial ownership transparency of not just companies but also trusts with a tax consequence".

"It shows the benefit of working together," he said. "No single country can tackle international tax evasion alone - and Britain should never fool itself into thinking that it can do this all by itself."