Portugal Takes on UBOs Under the EU Directive

In an effort to counter fraud, Portugal enacted a new UBO legislation (Law 89/2017) in August 2017 which lays down measures to combat money laundering and terrorist financing.  Portugal is looking into options surrounding the management and recording of Ultimate Beneficial Owner (UBO) information which serves to prevent companies from associating their businesses with corrupt parties including any institution that fails to comply with anti-money laundering (AML) and anti-terrorist financing regulations.

Portugal’s new legislation, which officially came into effect on November 19, 2017, requires that any company performing activities or acts of business within Portuguese territory must obtain a Portuguese tax number.  However, the law appears to be more lenient regarding the omission of UBO information because in these instances it is considered that no violation was committed.  On the contrary, if companies obtain the UBO information and it is found to be false then a violation has been committed which leads companies to assume that it is better to be silent rather than report potentially incorrect information.  Failure to comply with the rules of identification measures will result in a penalty of €1,000 to €50,000 (approximately $1,200 to $62,000).

Accurate UBO information from commercial companies includes:

  • Their shareholder(s) and respective share participation(s)
  • The person(s) that hold(s) directly or indirectly the ownership of the shares
  • The person(s) that has/have actual control over the company
  • Their tax representative (when applicable).

With the implementation of a “Central UBO Register,” all obligated entities will have to submit the required information and failure to do so in a timely manner will result in the entity being prohibited from distributing dividends, entering into agreements for the supply, public civil construction or acquisition of services or assets with the Portuguese State, tendering for public service concessions, trading in regulated market financial instruments, launching public offerings, and benefiting from the EU fund structural supports or from public investments.  Although failing to report UBO information isn’t considered to be an offense, it would still be detrimental and possibly damaging to the entity’s business operations.


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