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Real Substance

Real Substance

The principle of "Substance over Legal Form" has a central meaning to the accurate representation and reliability of information held in the financial statements. It allows tax authorities to ignore the legal form of an arrangement and look into what actually happened. The aim is to prevent artificial structures from being used for tax evision purposes. In order for a company to enjoy the preferential tax treatment of its jurisdiction, it must comply with the requirements on tax presence imposed by local tax authorities. These requirements may vary from country to country, however, if analysed, they are all focused on economic substance: there must be substance of company structure and substance of the transactions it makes.

The real substance of the structure is a total sum of several factors that make the company/the transaction ‘real’ and prove its physical presence (its office, its director, its employees) / its economic purpose (that has answers to the following questions: why was this transaction made? how did the parties benefit from it? was the transaction unnecessarily complicated?).

Korpus Prava is equipped to provide services in ensuring real presence and support for company activities in Cyprus.

We offer the following services in setting a Real Office:

  • Office lease and signing the lease agreement;
  • Signing agreements with utility services;
  • Working according to the agreement with an Internet provider and installing Internet connection in the office;
  • Furnishing the workplace (computer, phone, fax, desk, chair);
  • Installation and connection of equipment;
  • Help with finding a professional director and signing a contract with the director;
  • Registration of the company and its employees in accordance with social insurance requirements;
  • Assistance with finding an insurance agent, signing the liability insurance agreement;
  • Designing company website.

After the Office is set up, Korpus Prava provides maintenance services that include:

  • Rent payments;
  • Making salary payments to the professional director;
  • Withholding Tax from the directors’ salary;
  • Paying subscription fee for telephone and internet connection;
  • Professional liability insurance for the director;
  • Employee’s liability insurance;
  • Website maintenance.

Our specialists are prepared to provide necessary consultations and document control services that comply with the requirements of OECD, EU, taxation laws of Cyprus and the Russian Federation to facilitate your needs.