Structuring Assets Across Europe & the Gulf Under the OECD’s New Information-Sharing Regime

The flow of assets between Europe and the Gulf has grown steadily over recent years, but international tax transparency is catching up. The Organisation for Economic Co-operation and Development (OECD) has expanded its information-sharing standards, so we now see automatic exchange of financial account data, and a new framework for immovable property holdings. This matters if you hold assets in the Gulf region and Europe because structuring must adapt to the new regime. The sections below explain how.

What has changed in information-sharing

Previously many jurisdictions relied on exchange of information on request, meaning tax authorities asked for data when they suspected non-compliance. The OECD standardised this under the “foreseeably relevant” rule. Then automatic exchange of financial account information (AEOI) was introduced via the Common Reporting Standard (CRS) in 2014. More recently the OECD has proposed a framework for the automatic exchange of immovable property (real estate) information. In practice this means asset-holding structures crossing Europe and the Gulf are more visible to tax administrations than ever.

Key implications for structuring assets

In simple terms the increased transparency means three things. First, beneficial ownership of financial accounts and property is under more scrutiny. If you hold a European bank account or invest in a European property whilst resident or linked to a Gulf jurisdiction, the information may be exchanged automatically. Second, ownership chains that once hid the true beneficial owner have less room to operate because intermediary entities must feed accurate data. Third, planning must anticipate the long-term reporting obligations not just in one jurisdiction but in all partner jurisdictions under OECD standards.

Europe-Gulf cross-border specifics

When structuring assets between Europe and the Gulf you need to consider both sides carefully. Many European jurisdictions implement CRS and other OECD standards for financial accounts and property holdings. Gulf jurisdictions are also increasingly cooperating and revising their regimes. For example the UAE has signed tax information exchange agreements and is subject to peer review by the global transparency forum. If you hold property in Europe and are resident or have business links in the Gulf region you must check how your structure is reported, whether the procedure is timely and whether you have advised upstream and downstream entities correctly.

Designing resilient structures under the regime

Resilient structuring in the current environment means focusing on substance, clarity and compliance rather than opacity. That means you should ensure that each entity or vehicle you use has genuine operations or justification, that records are accurate, that beneficial ownership is documented, and that your advisers are aware of the reporting regimes. For instance if you set up a trust or hold property through a company, you should check how the ownership is reported under the new immovable property exchange rules. The OECD’s framework for property requires jurisdictions to exchange one-off information on existing holdings and then annual data on acquisitions, disposals and recurrent income. The result is that legacy structures built with little regard for transparency may face risks.

Common pitfalls and how to avoid them

One common pitfall is believing a Gulf-based structure is completely beyond European tax information flows. In reality the network of exchange is expanding and many jurisdictions are active. Also some structures use layered companies, trusts or nominee arrangements that may not pass muster if beneficial ownership cannot be established clearly. Another mistake is failing to review the income and disposal side of property ownership, particularly in Europe, given the OECD’s property exchange framework. A further risk is assuming that the reporting burden is only for financial accounts and ignoring non-financial assets. Avoidance of these risks means a proactive review of all holdings in Europe and the Gulf, up-to-date record-keeping, and testing the structure under the new transparency lens.

Practical steps for families and businesses

If you hold cross-border assets it is worth taking the following steps. Map all your major holdings in Europe and the Gulf, including property, shares, bank and investment accounts and any intermediary entities. Then check how beneficial ownership is documented in each jurisdiction and how reporting is or will be made under OECD standards. It is useful to engage professional advisers in both the European and Gulf jurisdictions to ensure compliance and tax risk is managed. You should also revisit your structure regularly given that regulations are evolving. Finally align the substance of your structure, meaning its business purpose, management and documentation, with the transparency regime rather than hoping regulation will stay static.

Why timing matters now

The transparency regime is already active in many jurisdictions for financial accounts and on request exchanges. The property information exchange is more recent but expected to gain momentum. For example the OECD’s latest framework addresses immovable property specifically and introduces modules covering existing holdings and future acquisitions and income. That means if you act now you have a window to refine your structures in a considered way, rather than reacting under pressure when an exchange arrives or a tax authority begins inquiry.

How The Knightsbridge Group can help

With over ten years advising international businesses and families, The Knightsbridge Group supports clients across the UAE and worldwide. We bring together legal, tax, immigration and fiduciary expertise under one roof to help you review your asset-holding structures, update them in line with the new OECD information-sharing regime and coordinate with trustees, banks, regulatory authorities or legal partners. To review your current arrangements or plan new strategies, contact info@kbgroup.ae.