Nordic comments on the Registered owner declaration and Indirect Investment

The Nordic financial sector in Finland, Sweden and Denmark would like to thank you for the opportunity to comment on the FASTER Registered owner declaration (ROD) and Indirect Investment.

Executive summary
To support a consistent and efficient implementation of the FASTER Framework, the Nordic financial sector asks for further guidance in several areas, including:

• Governance arrangements for future XSD updates, version control and implementation timelines.
• The practical application of beneficial owner requirements,
• The interaction between EU Registered owner concepts and national beneficial owner definitions,
• The treatment of indirect investment structures,
• Country-specific documentation requirements,
• Maintenance, reuse and renewal of investor declarations,
• Procedures for managing changes in investor circumstances,
• Handling large volumes of investor data within indirect investment chains,
• Standards for relying on information received from multiple parties in the investment chain and

Clear guidance in these areas would increase legal certainty, reduce the risk of divergent interpretations between Member States and support a more harmonised, efficient and scalable implementation of the FASTER framework across the European Union.

General comments

The report provides a precise and detailed description of the requirements relating to the Registered Owner Declaration (ROD), including its role in the relief procedures under Articles 13 and 14 and the reporting obligations under Article 10 of the FASTER Directive.

For indirect investment scenarios covered by Article 15, where the Registered Owner (RO) is not entitled to claim relief because the structure is tax transparent, the documentation requirements operate on two levels. In such cases, both the Registered Owner and the Underlying Investors (UIs) must be documented and handled in accordance with the FASTER requirements.

The Registered Owner is defined in Article 3(20) of the Directive. This is an EU-level concept that is independent of national beneficial owner (BO) definitions. The report includes a proposed PDF/A-3 template for the ROD (Section 8.5, pages 17-20), while also recognising that certification may be performed electronically at the discretion of the individual Certified Financial Intermediary (CFI).

Overall, the report provides a useful basis for implementing Articles 12 and 15 and contributes to a better understanding of the operational framework supporting the FASTER Directive. However, several areas would benefit from further clarification to support a consistent, harmonised and practical implementation across Member States.

Specific comments

Number of RODs and harmonisation across source countries

The report assumes that one ROD must be submitted for each source country (Section 8.4, page 14, blue box, bullet 2). Given that the Registered Owner is defined under EU law, a more efficient approach would be to permit one ROD per investor, provided all accounts follow the same pattern, or alternatively one ROD per account where different accounts require different certifications due to their purpose or activities.

Additional beneficial owner declarations may still be required by source countries based on national BO definitions pursuant to Article 12(1)(b). Such requirements should, however, be implemented separately on a country-by-country basis. From a CFI perspective, reliance on national BO definitions should be minimized, as these concepts differ across jurisdictions and are often difficult for both investors and intermediaries to apply consistently.

The Financial Arrangement provisions already address many of the concerns commonly associated with beneficial ownership. Developing clear and harmonised guidance regarding financial arrangements may therefore be a more effective and consistent mechanism for preventing the inappropriate allocation of treaty or tax relief benefits than introducing diverging national BO requirements.

A harmonised EU-wide approach to the ROD would significantly reduce operational complexity, administrative burden and implementation costs while improving investor access to relief procedures.

Interlinkage of documentation procedures between the ROD and the E-TRC

The suggested PDF A/3 template for the ROD references the E-TRC number, and we question this logic.

The ROD and the E-TRC are two supplementing documents, required to support relief under FASTER. One is signed by the RO and the other is issued by the authorities in the RO’s (or UI’s) country of (tax) residency. By requiring the E-TRC to be referenced in the ROD, operational coordination is required to a high extent, which increases the administrative burden.

The banks may run validation controls where they compare the information in the E-TRC with the information in the ROD, without the refence in the ROD.

Article 4(3)a requires the E-TRC to be renewed yearly or more frequently, and the assumption is that the banks can order ETRC’s on behalf of their customers. The lifecycle of the ROD follows alternative patterns, as addressed below. Linkage of the two may reduce the validity period of the ROD, if the E-TRC expires before the ROD.

Lifecycle, renewal and verification of the ROD

The validity period of the ROD is a key factor influencing the administrative burden of FASTER, the cost of relief services and, ultimately, investors’ access to relief.

Each time a ROD must be renewed, investor interaction is required. Since the circumstances of most investors change only infrequently, the lifecycle of the ROD should reflect this reality.

Article 12(3) allows Member States to permit CFIs to obtain RODs and perform the necessary verifications annually unless there is a change in circumstances or the information becomes incorrect or unreliable. However, it is unclear whether this provision establishes a harmonised annual standard or whether Member States may impose additional or more frequent requirements.

Further clarification is therefore needed regarding:

• how often a ROD must be obtained and renewed;
• which events trigger a renewal requirement;
• how frequently CFIs must validate or verify an existing ROD;
• whether Member States may require event-based submission of RODs in addition to annual reviews; and
• whether Member States may permit a ROD to remain valid indefinitely, subject only to periodic verification and changes in circumstances.

A short lifespan for the ROD, for example where renewal is required on an event-by-event basis, would significantly increase investor costs and create substantial challenges within the already tight reporting window of two months after the dividend event.

As previously argued, the ROD may apply to more than one source country, as it refers to EU definitions, unless the BO aspect, or source country specific renewal criteria and deadlines apply. The more harmonised and unified a ROD solution, the less operational complexity and burden and consequently the lower costs and attractiveness to investors. Excessive requirements for frequent investor interaction risk undermining operational efficiency and reducing the attractiveness of relief-at-source and quick refund procedures.

Indirect investment structures and Article 15

Article 15 applies in situations where the Registered Owner is tax transparent and therefore not itself entitled to relief.

In these circumstances, additional information and documentation are required for the Underlying Investors. In practice, many of the documentation requirements applicable to the Registered Owner are replicated at the level of the Underlying Investors, including the need for investor declarations and supporting E-TRCs.

Unlike direct investment scenarios, however, the CFI does not have direct access to the investors who are ultimately entitled to relief. Information and documentation are instead provided through the Registered Owner.

The allocation of responsibilities and liabilities should reflect this practical reality. It would therefore be advisable to introduce a supplementary tax transparency certificate* in Article 15 scenarios under which the Registered Owner formally assumes responsibility towards both the tax authorities and the CFI for the accuracy and completeness of the information and documentation supplied.

In tax-transparent structures, the Registered Owner is generally the entity with direct visibility over the investor base and is therefore best placed to perform the relevant know-your-customer (KYC), due diligence and control procedures.

Further clarification would generally be beneficial regarding how common standards should be applied where information is sourced from different parties within the investment chain (investors, collective investment vehicles, Registered Owners, CFIs, non-CFIs) and where multiple actors contribute to the information required for relief procedures. The tax transparency certificate suggested above*, could ideally be tailored to help standardise, define and document all the alternative scenarios, where the reporting CFI shares responsibility with other parties in the investment chain.

Financial arrangements

Article 12(1)(c) requires Member States to ensure that CFIs obtain a declaration from the Registered Owner concerning financial arrangements linked to the underlying publicly traded share. Accordingly, Part VII of the proposed ROD requires the Registered Owner to provide confirmation as to whether such arrangements exist.

At the same time, Article 12(2)(e) requires Member States to ensure that CFIs verify, based on information available to them, whether a relevant financial arrangement existed and remained outstanding on the ex-dividend date.

Further guidance is needed on the interaction between these two requirements, including:

• how a positive declaration by the Registered Owner should affect the verification obligations of the CFI;
• what level of visibility, investigation and control is expected from CFIs;
• whether a positive declaration should trigger additional event-based reporting or documentation requirements; and
• how third-party arrangements should be treated where the CFI has only partial visibility.

Without further harmonisation, Member States may develop differing due diligence and control expectations, creating significant compliance and operational burdens for CFIs operating across multiple jurisdictions.

In addition, Part VII of the proposed ROD includes a “Not Applicable” option alongside “Yes” and “No”. Further clarification would be helpful regarding the circumstances under which this option may be used.

Future XSD updates

Clear governance around future XSD updates, version management and implementation timelines is advisable and would support a stable and efficient implementation framework for financial intermediaries.

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For more information, please contact:

• Marja Blomqvist, Head of Tax Regulation, Finance Finland, marja.blomqvist@financefinland.fi
• Katrin Fahlgren, Senior Legal Advisor, Finance Sweden, katrin.fahlgren@financesweden.se
• Fredrik Bonthron, Chief Economist, Swedish Securities Markets Association, fredrik@svpm.se
• Lene Schønebeck, Tax Director, Finance Denmark, LSC@fida.dk