Substance & Business Infrastructure Support

Yes, and the withdrawal changed less than the headlines suggested. ATAD 3 would have created a single EU-wide minimum test with automatic reporting consequences. Its abandonment leaves in place every national management-and-control test, the beneficial ownership requirements in the parent-subsidiary and interest-and-royalties directives, general anti-abuse rules, permanent establishment rules and controlled foreign company regimes — which is where residency cases have always actually been decided. Over the same period bank and EMI scrutiny of operating footprint has tightened significantly. The practical exposure is unchanged or higher.

There is no statutory minimum, and any adviser quoting one is describing their own product rather than the law. The test is management and control, applied to your facts: what the company does, what it earns, what benefits it claims and who challenges it. A passive holding company with modest dividend income and no treaty dependency needs materially less than an IP entity claiming reduced withholding on royalties from three countries. The diagnostic exists to establish where on that range you sit.

It depends entirely on what the role is. A director who is properly appointed, understands the business, receives board papers, asks questions and takes real decisions is a resident director regardless of how the arrangement is labelled. A director who signs documents on instruction without engagement is a nominee in substance, and that is precisely the arrangement tax authorities and banks are equipped to detect. We provide the first and decline to present the second as the first.

It compresses the margin that justified the arrangement. A structure carrying EUR 40,000 to 60,000 a year of substance cost to access a 12.5% rate may still work at 15%, or may not, depending on the profit involved. The honest recommendation in a number of cases has been consolidation — fewer entities, each properly resourced — rather than maintaining a wider structure at a thinner level of substance across all of it. We model this before recommending it.

It is not too late to improve the forward position, and it is essential not to make the historic position worse. What we can do is establish genuine substance from a clean date, document it properly, and prepare an accurate account of the historic arrangement. What we will not do is create documents purporting to record meetings and decisions that did not happen, which converts a tax exposure into something considerably more serious.

Consistently, and increasingly through methods that are difficult to prepare for after the fact: verifying the address, calling the director, comparing declared headcount against public sources, checking whether the company has an operational footprint at all, and re-running these checks during periodic review rather than only at onboarding. Bank exit for a thin operating story is now more common in our experience than a tax residency challenge, and it happens far faster.

We coordinate it. Cyprus is where we are based and where we operate the arrangement ourselves — premises, directors, governance, accounting and the evidence file. In other jurisdictions we design the arrangement, select and instruct local providers, set the standards they have to meet and supervise delivery, but the local elements are provided by the local firm. We are explicit about which model applies to which entity, because the difference matters when something goes wrong.