In 2025, the corporate services sector in Europe is facing significant challenges due to increased regulatory scrutiny. From stricter AML and KYC requirements to the rise of economic substance rules and cross-border tax reporting, professionals in the sector must stay ahead of evolving legislation. This article explores the key regulatory changes impacting the European corporate services landscape and offers insights on how service providers can adapt to ensure compliance and protect their clients.
What you need to know about regulation in the European corporate services sector in 2025
The corporate services sector in Europe is undergoing significant change in 2025, largely due to increased regulatory scrutiny across multiple fronts. With the implementation of tighter Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, beneficial ownership transparency, cross-border tax reporting obligations, and the rise of Economic Substance requirements, service providers are facing more complexity than ever before. This shift is requiring firms to adapt quickly, integrate advanced compliance technologies, and stay ahead of evolving EU regulations.
Tightening AML and KYC requirements
Corporate service providers are facing increasingly stringent AML and KYC regulations. The EU’s 5th and 6th Anti-Money Laundering Directives (5AMLD and 6AMLD) impose stricter due diligence obligations, requiring service providers to verify not only clients but also their beneficial owners. These regulations make service providers criminally liable for failing to meet compliance standards, underscoring the need for comprehensive monitoring of high-risk clients and meticulous record-keeping. Staying on top of these changes is essential to avoid potential penalties and ensure the safety of clients from legal or financial repercussions.
Drive for beneficial owner disclosure
The EU’s 5th Anti-Money Laundering Directive also mandates the disclosure of beneficial ownership information via public registers. This push for transparency is vital in combating tax evasion and money laundering. However, it creates a significant administrative burden for service providers, who must continually track and update beneficial ownership details.
With the EU’s Court of Justice ruling in 2022 they ECJ limited public access to private beneficial owner data creating a bottleneck for European states that had yet to adopt a transparent beneficial owner register.
DAC6 and CRS regulatory reporting
The EU Directive on Administrative Cooperation (DAC6) has introduced mandatory reporting requirements for cross-border tax arrangements, while the OECD’s Common Reporting Standard (CRS) demands financial institutions and corporate service providers report foreign assets. Both of these regulations require thorough and ongoing assessments of clients’ tax arrangements and structures. Corporate service providers must ensure compliance with both EU and international tax reporting standards to avoid severe penalties for non-compliance.
Economic substance in low-tax European jurisdictions
European jurisdictions such as Jersey, Guernsey, and the Isle of Man have introduced economic substance requirements to prevent companies from being used solely for tax avoidance purposes. Corporate service providers now need to ensure their clients meet local substance criteria, which can require demonstrating real business activity, an operating office location, employed staff, and assets in the jurisdiction.
This trend has also extended to the EU’s Controlled Foreign Corporation (CFC) rules, forcing service providers to ensure that clients’ structures are in line with economic substance regulations to avoid potential fines or penalties.
GDPR and data protection in Europe
With GDPR still in effect, corporate service providers handling sensitive client data need to be fully compliant with stringent data protection laws. This is particularly crucial when dealing with cross-border data transfers or sensitive ownership information. Data breaches or non-compliance can result in significant fines, making it critical for firms to implement robust data protection strategies.
Brexit-related compliance
Brexit continues to have lasting effects on the corporate services landscape, particularly for UK-based providers working with EU clients. The regulatory divergence between the UK and the EU has created new challenges in areas like tax reporting and data protection. Service providers now face the complexity of navigating both UK and EU regulations, which are no longer harmonized. Advising clients on the impact of these Brexit-related regulatory changes has become a crucial responsibility for professionals managing multi-jurisdictional operations.
Monitoring regulatory changes in corporate services
The European corporate services sector is experiencing ongoing regulatory shifts that require constant vigilance and adaptation. From tightened AML and KYC regulations to greater demands for beneficial ownership transparency and economic substance, service providers must ensure they have the tools, technology, and expertise to navigate these changes effectively. As 2025 progresses, staying compliant with evolving regulations will continue to be a top priority. Offering clients proactive advice and understanding these regulatory nuances and how they impact your company’s systems, will be essential in managing risks and maintaining a competitive edge in the corporate services market.
