Beneficial Owner

A beneficial owner is the natural person who ultimately controls or has influence over a company or other legal entity, or on whose behalf a transaction is carried out. The concept comes from anti-money laundering and counter-terrorist financing legislation; the aim is to make visible the people behind corporate structures.

How Is It Identified?

Under anti-money laundering legislation, the beneficial owner is identified using the following tests in order:

1. Natural persons holding more than 25% of the company’s shares,
2. If there are none or there is doubt, natural persons with ultimate control over the company by other means (such as voting agreements or the right to appoint management),
3. If they cannot be identified either, the company’s most senior managers.

If shares are held through another company, the chain is traced until a natural person is reached.

Reporting to the Tax Authority

Since 2021, under Tax Procedure Law General Communiqué No. 529, beneficial owners must be reported to the Revenue Administration. Corporate taxpayers report this information with their provisional tax and annual corporate tax returns. A separate form and reporting period applies to other obliged persons. If the report is not made, or is incomplete or misleading, the special irregularity penalty under the Tax Procedure Law applies.

Banks and Other Obliged Entities

Banks, payment institutions, notaries and other obliged entities must identify their customers’ beneficial owners. Companies should document their ownership structure and beneficial owners when opening accounts and establishing business relationships. This process takes time, especially for companies with foreign shareholders; see Foreign Direct Investment.

Beneficial owner information should be consistent with the cap table and the share register and updated after every change in the ownership structure. Processing beneficial owner information constitutes processing of personal data.