Substance Requirements

Substance Requirements for Subsidiary Companies Operating from Overseas Locations

Tax and government authorities are demanding increasingly specific criteria to illustrate real presence and activity for various benefits to continue to be enjoyed in a number of low tax juisdictions.

Subsidiaries

With a growing number of international companies establishing subsidiaries in other countries, it has increasingly become a requirement for companies to show that the management, control and day to day decisions concerning the activity are taken in the particular foreign jurisdiction. The company itself would generally need to operate through an establishment which provides a real presence in that location.

“Genuine Economic Activity”

The key for subsidiaries to continue to enjoy legitimately available tax efficiencies is the requirement to demonstrate genuine economic activity.

Dixcart recognises the importance of this obligation, which affects enterprises controlled from both within the European Union and outside. A number of Dixcart Business Centres have therefore been established, through which a real presence and management organisation can be put in place and displayed.

Dixcart operates Business Centres in the Isle of Man, Madeira and in the UK.

Dixcart Business Centres

In addition to the management, accounting and legal support provided through Dixcart, the Dixcart Business Centres offer serviced office facilities, sophisticated communication systems, and demonstrate in each specific jurisdiction:
• Management, control and decision making processes that are substantially taken in that location by local directors and management
• A company that has local employees and pays personal taxes and social security contributions for them
• A physical office presence
• Separate telephone and email communication arrangements for each company operating from the management centre.