WiEReG and private foundations: identify, report and review beneficial owners

Section 2(3)(a) WiEReG does not apply corporate ownership percentages to a private foundation. Individuals qualify through a statutory function or their influence. The list includes founders, beneficiaries, every member of the foundation board and any other individual who ultimately controls the foundation in another way.

Where individual beneficiaries have not yet been identified, the abstract class of beneficiaries is reported. Once a person is identified from that class, that individual must be recorded. For persons who merely receive occasional benefits from an abstract class, the statute also refers to distributions exceeding EUR 2,000 in a calendar year. That threshold does not replace reporting of a person who has already been individually identified as a beneficiary.

For founders, the report includes identity, function and generally the proportion of endowed assets. Later additional endowments and historic formation documents can complicate that figure. The current commercial-register extract alone may not show the complete history of the foundation.

“Other ultimate control” is not a label for every adviser. It requires actual ultimate influence. Reserved founder rights, binding governing rights, unusually strong consent powers or a factual control arrangement can require closer analysis. An advisory board does not itself make all members beneficial owners; the rights and persons involved must be examined.

Under section 5 WiEReG, a newly registered entity reports its beneficial owners within four weeks of registration. If reported data change, the four-week period runs from knowledge of the change. The board therefore needs an internal channel that brings relevant resolutions and events promptly to the person responsible for the register.

Section 3 WiEReG requires appropriate due-diligence measures at least once a year. The foundation checks whether persons, functions and data remain correct. Within four weeks after the annual review falls due, it reports changes found or confirms that the existing record remains current.

The review date belongs in a permanent compliance calendar. A confirmation based on memory is not a review. The file should reconcile at least the commercial register, foundation documents, beneficiary decisions, board resolutions, deaths, identity changes, foreign data and possible control rights.

Documents and information used for beneficial-owner identification must be retained for at least five years beyond the end of beneficial ownership under section 3 WiEReG. That requirement concerns the underlying evidence, not merely a PDF register extract.

A sound file starts with the current foundation deed and, where relevant, the supplemental deed. It also contains all decisions identifying beneficiaries, current appointments, later endowment documents, identity evidence and the latest report and confirmation.

For an abstract class of beneficiaries, the description must allow later identification events to be detected. If a person from that class receives a relevant benefit, the resolution and payment must feed into the WiEReG process. The tax treatment is addressed separately in distributions and withholding tax.

Responsibility remains with the entity. A professional representative can support or file the report and may offer a compliance package. That does not replace the board’s actual knowledge or internal event reporting. Advisers can only verify information provided completely and on time.

Where a person or control right is doubtful, the file should record the issue, documents reviewed and reasoning. A defensible documented interpretation is stronger than a register entry that nobody can later explain.

Section 15 WiEReG provides substantial financial penalties. An intentional breach of central reporting duties can be punished by up to EUR 200,000 and gross negligence by up to EUR 100,000. Other duty breaches have separate ranges. The particular allegation and degree of fault require case-specific review.

Coercive penalties can add pressure when a report or confirmation remains outstanding. Waiting for a reminder is not deadline management. The board and administration should allocate responsibility for the file, event notifications and approval of the USP submission.

Recurring errors include copying the prior-year record without review, missing a newly identified beneficiary, overlooking a foreign address, omitting a board change and continuing to report an abstract class although individuals have already been identified.

When an error is found, the foundation should not merely amend the register. It should also examine the period affected, cause and possible consequences. Correction plus process repair is what prevents repetition.