Is a registered office and a local director enough substance?
No. A registered office and a director's fee create a presence on paper, not substance. What the regimes look for is people who make the decisions that drive the entity's profit, records that show them making those decisions, and functions in the jurisdiction that match the profit reported there. If the entity earns a margin for holding risk, someone local has to be capable of assessing and accepting that risk. The useful test is whether the arrangement would still make commercial sense if the tax outcome were ignored. A service address and an annual signature do not answer that question.
Can I fix substance problems just before an audit?
Not reliably. Substance is an operating decision that is evidenced as it happens: board papers written before the decision, correspondence showing who was consulted, employment records, premises, expenditure. Recreating those after a question has been asked produces documents dated after the period they describe, which is the first thing a reviewer notices. You can change how the entity operates from today, and that will help future periods. What you cannot do is make the past look different. Where earlier years are weak, the sensible order of work is to fix the operating model first and then deal with the open years on their own facts.
What records prove that decisions were actually made locally?
Papers that show the decision being formed, not merely recorded. Agendas circulated in advance, the analysis the directors were given, minutes that reflect discussion rather than a resolution copied from a template, travel and attendance records, and correspondence showing the questions asked before the vote. The test is whether an outsider reading the file could say who weighed the options. Signed resolutions drafted elsewhere and sent in for signature fail that test, because they evidence execution rather than judgement. Keep the working papers, not only the outcome.
Does every entity in my group need the same substance?
No. Requirements differ by jurisdiction and by activity, so the starting point is a list of what each entity actually does and where it does it. A holding entity, a financing entity and an operating entity are measured against different expectations, and the same activity can be treated differently in two countries. Build the list entity by entity and activity by activity rather than by group policy. Where an entity carries on no relevant activity at all, the real question is whether it needs to exist, and that is often a cheaper answer than resourcing it.
Who is supposed to be making the decisions on paper?
The people who are in fact making them. Problems start when the persons named in the constitutional documents are not the persons whose judgement drives the entity. If the group finance function decides and the local board ratifies, the records will show that, and the substance analysis follows the records rather than the intention. The fix is either to move the decision to the people named or to stop describing the entity as directed where it is not. Both are operating decisions rather than drafting ones, which is why the answer usually involves changing a reporting line rather than a document.
What happens if my substance reporting is wrong or late?
Several regimes now attach reporting obligations to the substance rules and penalties to failures, and some provide for the information to reach other tax authorities. So a defective return is not only a local exposure; it can put the same facts in front of a second administration that is assessing treaty entitlement or the taxation of the same profit. Treat the reporting as part of the substance work rather than a downstream form. Where a return has already gone in on a weak basis, establish exactly what was said before deciding how to correct it.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
Do NRIs pay tax on money sent to India?
Sending your own funds to India is a transfer of capital, not income, so the remittance itself is not taxed. What is taxable is income the money then earns in India — interest, rent, capital gains — under the rules for the account type it sits in. Sending money out of India is the direction that needs certification before the bank will act. See NRE, NRO and FCNR accounts.
