All entities required to register – TraFinG enters into force on 1 August...
The Transparency Register and Financial Information Act (TraFinG) entered into force on 1 August 2021. Its aim is to make further progress on combating money laundering and terrorist financing and, in addition to delivering greater transparency into legal entities and their beneficial owners, to create the basis for linking all the relevant registers throughout Europe. In particular, the TraFinG does away with the notional notifications that previously applied to listed companies and all legal entities for which information on the (notional) beneficial owners could be obtained from the commercial register, partnership register, cooperative society register, register of associations or company register. Specifically, this means that in future all these corporate bodies will also have to report their beneficial owners separately to the transparency register, even if the beneficial owners are already evident from the commercial register or other registers.
Special regulations only apply to registered associations (eingetragene Vereine). There are no changes with regard to foundations (Stiftungen), for which no notional registration has been possible anyway. When the Act to Modernise Partnership Law (MoPeG) comes into effect on 1 January 2024, companies under civil law (GbR) will likewise be subject to the requirement to be registered in the transparency register, if they choose to be entered in the company register.In addition, the cases in which foreign purchasers of German real estate must report information on their beneficial owners to the German transparency register have been considerably extended. Transition periods Transition periods that depend on the specific legal form apply to associations which still benefit from notional notification under section 20 (2) of the GwG on 31 July 2021. Registration in these cases must be submitted to the transparency register forAG, SE and KGaA by 31 March 2022,GmbH, eG, SCE, PartG by 30 June 2022,All other associations subject to transparency requirements (including OHG and KG) by 31 December 2022.In these cases, failure to register will also not be considered an administrative offence for one year after expiry of the applicable transition period.Companies that previously wrongly assumed notional notification in accordance with section 20 (2) of the GwG, or did not register their beneficial owners for other reasons, do not benefit from the transitional arrangements and are required to register as usual without delay. Transactions involving real estate located in Germany Foreign associations/trusts that have not already submitted information on their beneficial owners to another register operated by an EU Member State will in future be obliged to report this information to the German transparency register if they acquire a property located in Germany, in the following cases:Acquisition by way of an asset deal,Acquisition by way of a share deal within the scope of section 1 (3) of the GrEStG, i.e. at least 90% of the shares in a company that owns a German property are merged by the foreign association or are transferred to it,Legal transaction within the meaning of section 1 (3) a of the GrEStG, i.e. the legal transaction results in the foreign association holding an ownership interest of at least 90% in a company that owns a German property.In this context, it should be noted that notaries are prohibited from notarising transactions of this type if the foreign association has not complied with its notification obligation (section 10 (9) sentence 4 of the GwG). There are no transition periods in this respect. Action needed Action is required for all new entities established or registered from 1 August 2021 onward. The information on beneficial owners must be reported to the transparency register without delay; the transition periods do not apply to newly established entities. In general, the amendment to the law provides an opportunity to submit missing reports; registrations that have already been submitted should be reviewed for accuracy and to see whether further information is required (e.g. additional nationalities). If notional notification still applies on 31 July 2021, the transition period should be used to prepare for registration in the transparency register. Registered associations (eingetragene Vereine) should review the automatic entries in the transparency register with regard to their accuracy.In addition, associations subject to transparency requirements must in future check and, if necessary, update their registration in the transparency register if there are any changes involving their (notional) beneficial owners (for example, change of shareholders or management). Lastly, in the case of transactions with foreign purchasers, it is important to check in good time whether this involves a property located in Germany, with the result that the relevant information would need to be registered in the transparency register. Given that notaries are prohibited from notarising transactions if the relevant information is not registered, this point should also be clarified with the notary in advance.We would be happy to assist you in identifying beneficial owners and registering the relevant information with the transparency register. Please feel free to get in touch at any time.