By Stanley Foodman | CEO, Foodman CPAs & Advisors
In today’s global tax environment, compliance is no longer a static obligation. It has become a dynamic exercise in credibility. The expansion of the OECD’s Base Erosion and Profit Shifting (BEPS) framework, along with the continued rollout of BEPS 2.0, is reshaping how family offices must structure their international operations. Economic substance, once loosely interpreted, is now a decisive standard. It determines not only whether a structure is compliant, but whether it is sustainable in the face of increasing cross-border scrutiny.
For family offices managing global assets, this shift represents more than a regulatory update. It calls for a clear alignment between structure, function, and long-term intent.
The Strategic Impact of BEPS Action 13 on Family Office Structures
BEPS Action 13 introduced country-by-country reporting (CbCR) to give tax authorities better visibility into where profits are generated and they are allocated. While originally targeted at multinationals, the implications now extend to family offices with international footprints.
Structures that include:
- Holding companies in tax-neutral jurisdictions
- Decentralized Investment management functions
- Intra-group transactions for advisory, management, or IP services are now subject to increased attention.
Tax authorities are asking whether each entity’s stated role is supported by meaningful operations. Where there is a disconnect between form and function, family offices may trigger permanent establishment of risk in jurisdictions where they do not intend to have tax presence.
Across key financial centers, including Cayman Islands, the British Virgin Islands, the UAE, and Switzerland, we are seeing renewed scrutiny of entities with limited substance. Shell structures, passive holding companies, and nominee directorships that lack operational integrity are increasingly being challenged.
Substance Is No Longer Procedural. It Is Foundational.
Establishing substance is not about satisfying checklists. It is about ensuring that your family office framework reflects how decisions are made, where people operate, and how value is created. The markers that matter include:
• People: Local staff with relevant qualifications and direct responsibilities
• Place: Decision-making occurring where the entity is based
• Process: Active governance, including documented board meetings and local oversight
• Pricing: Internal transactions documented and supported by OECD-aligned transfer pricing
These are not technicalities. They are now central to how compliance is evaluated.
In our work with global families, we have found substance-driven structuring strengthens more than compliance. It provides clarity across jurisdictions, enhances audit readiness, and supports the strategic continuity of wealth and investment planning.
BEPS 2.0 and the Global Minimum Tax: What to Expect in 2025
The introduction of the Pillar Two global minimum tax under BEPS 2.0 represents a coordinated shift in how international tax liability is assessed. The framework sets a floor at 15 percent effective tax in each jurisdiction where large multinational groups operate.
While most family offices may fall below the 750-million-euro threshold for formal application, the direction of policy is unmistakable. What was once optional is becoming expected.
Three implications are clear:
- Substance requirements are rising. Passive entities will no longer be overlooked.
- Transfer pricing enforcement will tighten. Internal service payments must be clearly defined and economically justified.
- Legacy structures may require redesign. What was sufficient a decade ago may now fall short under global minimum tax standards.
Many of our clients are using this moment to assess and update their frameworks. Some are consolidating entities, others are strengthening local presence, and many are aligning governance with real operational flows.
A Practical Framework for Readiness
Family offices should begin with a deliberate review of structure and reporting. Consider:
- Does each entity in the group have a clearly defined purpose and measurable activity?
- Are internal reports and local filings consistent across jurisdictions?
- Can you explain where and how strategic decisions are made, and by whom?
- Is your current structure resilient, transparent, and built to adapt?
These are no longer advisory questions. They are becoming standard lines of inquiry from regulators, auditors, and institutional partners.
Final Thought: In an Evolving Landscape, Clarity Becomes Strength
In a global environment where tax standards are converging, clarity and credibility matter. Structures that reflect operational reality are not only compliant; they are more defensible and more enduring.
At Foodman CPAs & Advisors, we support family offices in aligning their structures with the evolving requirements of BEPS, CbCR, and global tax governance. Our approach combines deep technical insight with practical experience across jurisdictions. If your family office is managing cross-border structures and you have not recently reviewed your approach to economic substances or BEPS 2.0, we invite you to schedule a confidential consultation. Our team works directly with internationally active families and their advisors to align structures with emerging global standards, before they become compliance issues.
To discuss how these insights apply to your structure, schedule a confidential consultation with our team.
