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The registers will now only be accessible to members of the public, including journalists, who can prove a “legitimate interest”. Only owners of trusts that generate taxable income have to register, under the agreement on the draft fourth Anti-Money Laundering Directive (AMLD).
The compromise comes in the wake of the Luxembourg Leaks tax scandal that has rocked the European Commission and greater public scrutiny of corporate tax practices. Campaigners argue that public registers of company ownership would be a vital tool in the fight against tax avoidance by multinational businesses.
Such corporations can legally minimise their tax payments by shifting money to their subsidiaries in other countries. Individuals and businesses can also use shell companies and trusts to illegally evade tax by hiding their assets. The registers will also help fight money laundering and organised crime, MEPs said.
MEPs in the Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) Committees added the register requirement as an amendment to the AMLD bill. They called for the register to be public and to include owners of both companies and trusts.
But that was watered down in talks over the AMLD last night. In order for it to become EU law, both Parliament and Council must agree an identical text.
Details on how the legitimate interest would be proved remain unclear but EurActiv understands that member states will have some leeway in setting their own bar.
Denmark, France and the UK have signalled they will make their registers fully accessible to the public. The Financial Transparency Coalition, a global network of NGOS, called on member states to follow their example.
Those passing the legitimacy test will be able to access the beneficial owner’s name, month and year of birth and residency and details on ownership. MEPs added some exemptions, such as one for underage trust holders, which they said was to guard privacy.
The European Parliament said that any exemption to the access provided by member states would be possible only on a case-by-case basis in exceptional circumstances.
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