Under the German Money Laundering Act (Section 3 GwG), the UBO is the natural person who ultimately owns or controls a legal entity. For corporations, a UBO is typically identified in two main ways. Firstly, through material ownership, which is defined as a person who directly or indirectly holds more than 25% of the capital shares or controls more than 25% of the voting rights. Secondly, through control, which refers to a person with “ultimate influence” exercised in a comparable manner. This can include having veto rights on fundamental decisions or holding a dominant position, even with a minimal shareholding. The law provides for more detailed rules. If, after exhausting all reasonable efforts, no UBO can be identified based on the criteria above, the law establishes a substitute mechanism. In such cases, the legal representatives of the entity (e.g., managing directors, executive board members) are registered as its UBOs.

If the shares, voting rights, or control are held/exercised by an association in any other way, the indirect beneficial owner is deemed to be the person who controls the parent association within the meaning of Section 3 (2) sentences 2 to 4 GwG in conjunction with Section 290 (2) to (4) HGB. Control generally requires capital shares or voting rights of more than 50%.

Which Entities Must Register Their UBO?

The obligation to register a UBO applies to nearly all private law legal entities (e.g., GmbH, AG, UG) and registered partnerships (e.g., OHG, KG, GmbH & Co. KG). Since 2024, this also includes registered civil law partnerships (eGbR). The scope also covers trusts, non-legal foundations, and foreign entities holding real estate in Germany. The law provides for very limited exemptions, primarily for companies listed on an organized market that are subject to equivalent EU transparency requirements.

Legal entities based abroad (real estate cases)

In which cases are associations based abroad required to report under Section 20 (1) GwG? According to Section 20 (1) sentence 2 GwG, associations based abroad are required to report to the Transparency Register …

• if they own real estate located in Germany or undertake to acquire such property,
• if they combine shares within the meaning of Section 1 (3) of the Real Estate Transfer Tax Act (GrEStG) or if such shares are transferred to them, or
• if they hold an economic interest within the meaning of Section 1 (3a) of the Real Estate Transfer Tax Act on the basis of a legal transaction

The UBO Identification and Registration Process in Germany

The process involves correctly identifying the UBO based on the legal criteria of the GwG and then formally registering them in the Transparency Register. All submissions must be made electronically through the official portal, www.transparenzregister.de. The crucial first step is a thorough analysis of the ownership and control structure. New entities must complete the registration “unverzüglich” (without undue delay) after their entry into the commercial register, and any subsequent changes must also be reported immediately. ECOVIS provides full support throughout this process, from the analysis of your corporate structure to managing the registration with the authorities.

Public Access to the German UBO (Transparenzregister) Register

Following a ruling by the European Court of Justice in November 2022, unrestricted public access to the Transparency Register was suspended. Access is now granted based on a “legitimate interest” (berechtigtes Interesse). The public can request access and, upon approval, view the following information about a UBO:

• Full name
• Country of residence
• Year and month of birth
• All nationalities
• Information on the nature and extent of the beneficial interest

The public portal can be accessed at www.transparenzregister.de. While authorities and certain obligated entities (like banks and lawyers) have broader access rights, the general public must formally apply and justify their interest to view the data.

Consequences of Non-Compliance in Germany

Failure to comply with UBO registration duties carries significant sanctions that can directly impact a company’s operations and finances. The primary consequences include:

• Fines: A fine of up to €150,000 can be imposed for intentional violations, and up to €100,000 for negligent violations. For serious, repeated, or systematic violations, fines can reach up to €5 million or 10% of the company’s total annual turnover.
• Transaction Prohibitions: Non-compliance can have severe operational impacts. For example, notaries are empowered to refuse the certification of real estate transactions if a participating entity is not correctly registered in the Transparency Register, effectively blocking property sales and M&A deals.
• Business and Financial Restrictions: Banks may be required to suspend or terminate business relationships, including freezing accounts, for entities that fail to meet their UBO reporting obligations. This can cripple a company’s ability to conduct business.
• Exclusion from Public Procurement: A company that has not correctly registered its UBO is barred from participating in public procurement procedures. Contracting authorities are obligated to verify compliance before awarding contracts.
• Public Naming: Final penalty decisions for non-compliance are published on the website of the Federal Office of Administration (the “name and shame” provision), where they remain publicly visible for five years, causing significant reputational damage.

Ensure Your Compliance and Avoid Penalties in Germany

Correctly identifying your Ultimate Beneficial Owner and ensuring their proper registration is a critical legal requirement. Our team of experts provides a comprehensive service that covers both the UBO identification based on your specific corporate structure and the complete handling of the registration process. By entrusting this task to us, you can be confident in your compliance and avoid the severe penalties associated with any errors.