Substance

OECD in its action plan BEPS calls for ‘substance’ to become an essential element of international tax planning. ‘substance’ is a new term for tax residency. Recent changes in tax residency rules in Russia and Greece require immediate action by the companies registered in Cyprus.

In order to take advantage of the EU Parent/Subsidiary Directive and Double Tax Treaty with Russia, a Cyprus registered company must confirm its physical presence. They must also be able to prove that Cyprus is indeed a place of effective management and that strategic decisions are made in Cyprus in the premises of the company, by qualified and accordingly authorized employees.