European Union: Central Register Of Beneficial Ownership Of Trusts – Key Considerations For UK Trustees

Central Register of Beneficial Ownership of Trusts ("CRBOT") – UK Trustees caught when carrying on a business relationship in the State

In our Beneficial Ownership of Trusts: Clock Ticking on Filings to Central Register briefing note we highlighted the compliance obligations placed on trustees of express trusts documented by deed or other declaration in writing whose trustees are resident in Ireland or where the trust is otherwise administered in Ireland. These include an obligation to maintain an internal register of the beneficial ownership for the trust, as well as requiring those trustees to file details as to the beneficial owners of the trust with the Central Register of Beneficial Ownership of Trusts ( "CRBOT") by October 23, 2021 for trusts in being on April 23 2021 or otherwise within 6 months of the trust being established.

As noted in that briefing, the definition of a beneficial owner of a trust in this context is far more expansive than might be traditionally understood.

In the case of a trust where the trustees are Irish resident or alternatively where the trust is administered in the State, the analysis is straightforward. Firstly is it an "express trust" documented in writing and if so, do any of the specific exemptions from registration for certain trusts apply, which include amongst others, certain pension trusts and certain approved share schemes trusts.

A trust could be considered to be administered in the State, whether trustees are resident in the State or not, when services such as the management of its assets, or other services provided by legal or accounting professionals or other trust service providers, are rendered to the trust by such professionals operating in the State. The definition of "administered in the State" is broad and can bring a trust within the scope of CRBOT, even when the administration activities are provided on a temporary basis.

In addition to trusts where the trustees are Irish resident or the trust is otherwise administered in the State, the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (the ("2021 Regulations"), confirmed that for non-EU resident trusts or where the trust is not otherwise administered in the EU, that trusts may still be in scope if the foreign trustees:

• (i) enter into a business relationship in Ireland; or
• (ii) acquire land or other real property in Ireland in the name of the trust.

This enhances the scope of non-EU trusts that must register with CRBOT. In particular, given the close connection between Ireland and the UK, it is quite possible that UK trusts may meet this threshold.

Whilst the fact pattern of a non-EU trust being administered in the State might not be common, it is much more likely that a foreign trust could be deemed to have a "business relationship in the State". How easy that might arise was perhaps not fully appreciated when the 2021 Regulations came into being.

The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 did provide a definition of a business relationship relating to a designated person and a customer of the person. It means "a business, professional or commercial relationship between the person and the customer that the person expects to be ongoing"

In its " CRBOT – FAQs and Troubleshooting for UK trustees and advisorsOpens in new window" Irish Revenue recognise that a business relationship in a trustee context "is a business, professional or commercial relationship between the trustee, on behalf of the trust, and the customer that is expected to be ongoing".

Further they go on to provide an example of a UK trust holding an Irish investment bond as an example of what will fall within the definition of a business relationship being carried on in the State.

In those circumstances, unless the UK trustees of a relevant trust, have registered that trust and filed the information on the Central Register in another EU Member State where information is the same as what is required to be filed on the CRBOT (with the exception of Irish tax numbers), they will now be obliged to register the details of the beneficial owners of the UK trust on CRBOT. It is notable that a registration by the UK trustees to the UK's Trust Registration Service ("TRS") does not fall within this permitted derogation, given the UK's departure from the EU post Brexit.

This recent guidance will significantly enhance the number of registrations to CRBOT and in practice we have already seen a significant number of enquiries from UK trustees and/or their UK advisors as many of the insurance companies and other financial institutions have relayed the position to their UK trustee clients.

Registration to CRBOT is conducted through a separate channel on Revenue's Online Service ("ROS") platform and practically UK trustees are likely to engage a local service provider with an existing ROS registration to make the filing as their agent.

Meeting the registration obligation

Trustees of relevant trusts are reminded that the initial deadline date, to register details of the beneficial ownership of a trust on the CRBOT, was 23rd October 2021 for trusts that were established on or before 23rd April 2021. Trusts established after that date, must register within six months of establishment of the trust. In the recent FAQ's for UK trustees, Revenue note as follows:

"Revenue recognises that there may have been genuine difficulties for some trustees in registering all their details by this date and will provide support to trustees who are making best efforts to register. Revenue continues to engage with representative bodies and trustees, to help trustees meet their registration obligations. However, failure of a trustee to meet their obligations is an offence under Irish legislation and the Irish Statutory Instrument 194/2021 sets out the penalties for trustees that fail to comply".

Revenue has acknowledged difficulties being experienced by UK Trustees trying to register their details on ROS. Revenue is offering a concessional period to alleviate any concerns in relation to deadlines for registration because of the technical difficulties which have arisen for Trustees registering on ROS. The concessional period does not dispense with the requirement to register the trust..

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.