Glossary
Economic substance
The requirement that an entity has real activity, people and decision-making where it claims to be, rather than only a registered address.
Substance rules exist to stop profits being booked where nothing happens. They typically test whether core income-generating activity, adequate staff and expenditure are present in the jurisdiction, with an annual filing to evidence it.
For digital-asset groups this bites hardest on foundations and issuer vehicles, which are often deliberately lightweight — and where a structure fails the test, the consequences arrive years later and are expensive to unwind.
Where this comes up
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