Beneficial owner — the 25% test and control tests
Almost everyone knows the 25% rule. Far fewer notice that it is only half the definition. Under Article 51 of Regulation (EU) 2024/1624, beneficial owners of legal entities are the natural persons who have an ownership interest or who control the entity — and the Regulation says expressly that control via other means is to be identified independently of and in parallel to ownership. A structure can therefore have beneficial owners who hold no shares at all.
1. Ownership interest: the 25% test, and how to compute it
Article 52 defines an ownership interest as direct or indirect ownership of 25% or more of the shares, voting rights or other ownership interest — including rights to a share of profits, other internal resources or the liquidation balance. Two mechanics matter more than the number:
- Indirect ownership is multiplied along each chain — the shares or voting rights held by intermediate entities are multiplied through, and the results from the various chains are then added together.
- Every level counts. The Regulation requires all shareholdings on every level of ownership to be taken into account when assessing whether an ownership interest exists.
That is a calculation, not a lookup. A person holding 40% of an entity that holds 40% of your customer has 16% through that chain — but if they also hold 15% through a second chain, the sum is 31% and they are a beneficial owner.
2. Control, which is the half that gets missed
Article 53 defines control of a legal entity as the possibility to exercise, directly or indirectly, significant influence and impose relevant decisions within it. It then separates two ideas that are often conflated:
| Concept | Test |
|---|---|
| Control through ownership interest | Direct or indirect ownership of 50% plus one of the shares, voting rights or other ownership interest |
| Indirect control | Control of intermediate entities in the structure, where direct control is identified on each level |
| Control via other means | Includes the majority of voting rights, whether or not shared by persons acting in concert, and the right to appoint or remove a majority of the board or equivalent body |
3. What this means for an onboarding file
A defensible beneficial-ownership file therefore has two strands. The ownership strand is arithmetic and can be automated from a structure chart. The control strand is documentary — shareholder agreements, articles, board-appointment rights, voting arrangements and concert-party terms — and it cannot be derived from a register extract.
Article 22 requires identification and verification of both customers and beneficial owners, and Article 24 adds a duty to report discrepancies against the information in beneficial ownership registers. Together they mean the register is a cross-check, not the source: where your file and the register disagree, you are expected to say so rather than adopt the register’s answer.
FAQ
Is 25% a threshold or a starting point?
It is the definition of an ownership interest for Article 51. It is not the whole definition of a beneficial owner, because control via other means is assessed separately and can identify people below or outside the shareholding structure entirely.
How is indirect ownership calculated?
Multiply the holdings along each chain of intermediate entities, then add the results from the different chains together. All shareholdings on every level are taken into account.
What if the register says something different from our file?
Article 24 requires the discrepancy to be reported. The register is a verification input, not the answer — a firm that simply adopts the register position has not performed the Article 22 identification.
Related: Spain’s beneficial ownership register · Transparenzregister in Germany · The EU AML package timeline
