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In international taxation, where decisions are made matters as much as who makes them. For high-net-worth individuals and crypto investors operating across borders, the concept of “management and control” is the foundation upon which tax legitimacy stands.
You can own a company anywhere in the world — from a London holding to a Caribbean entity — but if its strategic decisions are effectively made elsewhere, tax authorities will claim taxing rights in that “elsewhere.” This is known as the place of effective management test, and it’s the keystone of tax residency law worldwide.
In this article, we’ll explore why local management isn’t just administrative, but the defining factor that determines whether your investment structure is legally defensible or vulnerable to requalification. We’ll show how SBH Capital Partners uses the principle of local governance in Saint-Barthélemy to provide its clients with solid, compliant, and lasting tax legitimacy — especially for those converting cryptocurrencies into tangible real estate assets.
The OECD Model Tax Convention defines a company’s residence based on where its “place of effective management” (POEM) is located. In simple terms, this is the country where key managerial and commercial decisions necessary for the conduct of business are actually made.
If a company is incorporated in one country but its strategic decisions, board meetings, or financial management occur elsewhere, then the country of effective management — not incorporation — may claim jurisdiction to tax its profits.
Tax authorities typically look at:
In France, this principle is codified in administrative doctrine and case law under Article 209-I of the French Tax Code. Similar criteria appear in OECD commentaries and the BEPS Action 6 framework, which target artificial relocations of profits.
Simply put: if you manage a foreign company from your laptop in Paris, that company is fiscally French — no matter where its registration papers say it’s based.
Many investors mistakenly believe that a registered address is enough to establish fiscal residency. They set up companies in low-tax jurisdictions, hire a nominee director, or rent a virtual office, but continue to control everything remotely — emails, payments, contracts, and even client relations.
To tax authorities, this pattern is a red flag. In recent years, numerous cases have shown how governments pierce the corporate veil to reveal the real location of management:
These precedents illustrate a simple truth: remote management equals retained residence. Without genuine local governance, an offshore or foreign company may be deemed tax resident in the manager’s home country, defeating the entire purpose of fiscal planning.
Local management does not merely protect against requalification — it creates a coherent legal narrative that regulators, auditors, and banks can verify.
When strategic decisions are made and documented locally — through minutes, resolutions, and contracts signed on-site — it builds audit-ready evidence of genuine management.
Having a local manager ensures that the day-to-day operations match the declared residence. Bank transfers, meetings with notaries, and communications with authorities occur within the jurisdiction, reinforcing fiscal credibility.
A resident manager provides continuity. Instead of sporadic remote involvement, there is an ongoing physical and legal presence — the very definition of substance.
Banks, auditors, and regulators prefer working with entities that have local oversight. It simplifies compliance with anti–money laundering (AML) rules and reduces the perception of opacity, especially when dealing with digital assets or cross-border capital.
In short, local management is the factual backbone of fiscal legitimacy. It transforms a company from a paper shell into a functioning, compliant resident entity.
At SBH Capital Partners, we designed our framework around the very principle of local management. Saint-Barthélemy, as a French overseas collectivity, operates under French civil and financial law but enjoys an independent tax regime — a rare combination of legal stability and fiscal neutrality.
Here’s how we ensure that management — and thus residency — is unquestionably local:
This framework ensures that the company’s center of management and control is physically and legally located in Saint-Barthélemy. As a result, its fiscal residence is clear, defensible, and compliant under French law and OECD principles.
Local management isn’t just a legal shield — it’s a strategic advantage.
Authorities cannot challenge an entity’s fiscal status if all management decisions, operations, and documentation are genuinely local. This prevents double taxation or residency conflicts between jurisdictions.
A Saint-Barthélemy–based company that meets residency conditions may benefit from exemption from the French flat tax (PFU) on crypto conversions reinvested locally, as well as other local fiscal advantages.
Financial institutions are more willing to onboard entities that demonstrate substance and governance. Local management satisfies AML/KYC expectations, opening doors to premium banking and investment services.
Operating through a properly managed local company provides legal separation between the individual and their assets, enhancing protection against creditor or litigation risk.
When tax authorities audit, documented local governance provides instant credibility. Meeting minutes, local contracts, and accounting records confirm that the company operates within the declared jurisdiction — not from abroad.
By combining these factors, investors gain both fiscal optimization and institutional credibility — a rare balance in the global tax landscape.
SBH Capital Partners transforms local management into a turnkey governance solution. Our team of legal, tax, and corporate specialists ensures that each structure is legally compliant, fiscally neutral, and fully transparent.
We provide:
After the initial five years, clients can either:
Through this model, SBH guarantees that management, substance, and fiscal residence remain perfectly aligned — the ultimate mark of tax legitimacy.
In the eyes of tax authorities, local management is the anchor of fiscal truth. Incorporation papers can be printed anywhere, but only real governance on the ground gives a structure its legal and tax validity.
For global investors — especially those transforming digital wealth into tangible assets — local management means more than compliance. It means control, continuity, and confidence.
With SBH Capital Partners, that control becomes institutional. Our clients’ companies are managed transparently, efficiently, and locally, under a legal framework that unites French rigour with Saint-Barthélemy’s fiscal independence.
If your goal is to build a structure that stands firm under scrutiny, the answer is simple:
put your management where your residence is — and let SBH Capital Partners make it real.
1. What exactly defines “local management”?
It refers to the jurisdiction where strategic, financial, and operational decisions are made — not just where the company is incorporated.
2. Can I manage my foreign company remotely and still be compliant?
No. If you make decisions from your home country, tax authorities can requalify your company as resident there.
3. How does SBH ensure genuine local management?
By acting as the official manager in Saint-Barthélemy, conducting board meetings locally, managing banking, and filing all compliance documents on-site.
4. What are the tax benefits of local management in Saint-Barthélemy?
It secures fiscal residency on the island, enabling access to its neutral tax regime and exemption from mainland flat tax on local crypto conversions.
5. Is this legal under French and OECD rules?
Yes. The structure is fully compliant under French jurisdiction and OECD transparency standards. It represents lawful fiscal optimization, not evasion.
Discretion, compliance, and excellence in Saint-Barthélemy.
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