Effective management solutions

Our distinction from other international corporate specialists lies in the attention we give to the issues
of place of effective management when assisting our clients in creating international corporate structures
for the purposes of tax‐planning and asset protection.

Need for the transfer of effective management

Whether based on common law or civil law, our clients have already established central management and control test (or place of effective management principle) in their respective jurisdictions. As a result, irrespective of where a company was incorporated, the country in which such a company can claim tax residency depends on its place of effective management. Moreover, place of effective management is included as a tie‐breaking factor in the OECD model double tax treaty.

Since no definition has been unified, or in most cases even created, for the terms central management and control, or place of management in relevant national laws and double tax treaties, the determination of tax residence is made on a case‐by‐case basis.

Court cases

Cases such as Wood vs. Holden (2005, 2006) or Laerstate BV vs. HMRC (2009) are examples of situations in which tax authorities and courts examined whether the company in question is effectively managed in the country where the company was incorporated and declares itself to be a tax resident. Other court cases (Cadbury Schweppes, 2006 and Vodafone 2, 2008) have influenced the controlled foreign company laws implemented in many jurisdictions and have led to the creation of specific substance tests, which are now applied to companies controlled by the residents of such jurisdictions.

Services supporting substance

As a result, we offer a portfolio of services that are designed to allow a company to act as an active, traceable and functional entity with a demonstrable degree of administrative autonomy: