The Beneficial Owner: Moving from a “Legal Void” to a Functional Framework in Venezuelan Tax Law

Abstract

This article examines the absence of an express notion of beneficial owner in Venezuelan tax law and assesses whether the principle of economic reality may operate as a functional equivalent of said concept. From a doctrinal and comparative approach, the study analyzes the origin and function of beneficial ownership in international tax law and contrasts it with the mechanisms available under Venezuelan law. It argues that, while no conceptual or terminological equivalence exists between beneficial ownership and the principle of economic reality, a partial functional equivalence can be supported, as both aim to attribute income to the person who effectively controls, enjoys, and bears the economic risks associated with the income. However, such equivalence is subject to strict constitutional and dogmatic limits, including legality, tax law reservation, and legal certainty. The article concludes that Venezuelan tax law already provides adequate tools to address abusive interposition of entities without the need to expressly incorporate the beneficial owner concept.