Substance

Substance — the real economic presence (office, staff, local decision-making) a cross-border structure must have before modern tax law respects it. CFC (controlled foreign corporation) rules are the enforcement: an offshore company controlled from your home country, with no genuine activity abroad, is generally taxed as if it were domestic — “you’re just adding paperwork.” Substance requirements are why the stay-home-incorporate-in-a-haven trick is dead, and why every legitimate structure decision starts with what will actually happen there.

First used in: 5.6 · Going global, legally