CMS Expert Guide on substance issues across Europe

The focus on entity substance in the context of investment structures has sharpened significantly in recent years. Holding companies involved in cross-border transactions must have sufficient economic and physical substance to fend off possible challenges from tax authorities.

The degree of substance required for an entity may differ from one jurisdiction to another. The appropriate level of substance must therefore be assessed on a case-by-case basis according to the facts and local requirements.

The third anti-tax avoidance directive (known as “ATAD 3”) will add a new layer of substance rules and should provide a more precise framework from an EU perspective. The directive aims to prevent the misuse of shell entities located in the EU for tax evasion and avoidance purposes, in part by imposing minimum standards for substance within the EU – without necessarily replacing local (more stringent) rules.

CMS Funds Group tax experts have designed this expert guide to provide an overview of the substance requirements currently applicable in selected jurisdictions. We are grateful to the numerous contributors to this guide. If you would like more information about a particular jurisdiction, please do get in touch with them.

Information provided as of June 2023.

The information contained in this Guide is for general purposes only and does not purport to constitute legal or professional advice from CMS or any other firm and as a consequence may not be relied upon.

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CMS Expert Guide on substance issues across Europe

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