Substence (substance), economic presence, or economic essence of foreign companies is a set of certain features that distinguishes shell companies or dummy companies from real operating companies. Initially, the substence was used to determine in which country a particular company is a tax resident, i.e. the places where the company must pay taxes (yes, the country of registration of the company and its tax residence do not always coincide).
Today, the company's presence of a substance (or economic essence) is one of the mandatory conditions for normal work with banks and other financial institutions. Without it, it will be more difficult for you to open a bank account, and in some cases banks even close previously opened accounts.
In many countries, the availability of a permit is a prerequisite for obtaining a certificate of tax residence, without which it is impossible to apply benefits under the agreement on avoidance of double taxation
As a rule, the economic essence of a company consists of the following features:
1. The presence of a real office in the country of registration (not virtual)
2. Availability of local staff
3. Implementation of operational management in the country of registration (local manager or director)
4. Local phone, website, email.
In some cases, additional signs may be required, as, for example, in Cyprus.
By contacting Antwort, you will always receive full consulting support on all issues related to the creation of an economic presence. We will help you determine exactly what level of substance you need to create, and we will help you do it with minimal costs!