INREV has published a new paper, Behind the curtain: Beneficial ownership and substance in European real estate investment structures, examining how beneficial ownership, substance, economic ownership and anti-abuse concepts apply to commonly used European real estate investment structures.
As tax authorities across Europe place increasing emphasis on economic reality over legal form, the paper explores how holding companies, financing vehicles and local property companies can demonstrate entitlement to withholding tax relief through their governance, resources, decision-making and actual conduct.
The paper highlights several important findings:
- Beneficial ownership, substance and anti-abuse concepts are related but legally distinct, with each requiring separate consideration when assessing investment structures.
- Fragmentation remains the defining characteristic of the European landscape, with significant differences in how countries such as Denmark, France, Germany, Poland and Spain apply these principles.
- Legal form alone is not enough, with tax authorities increasingly examining actual decision-making authority, control over income, economic risk and commercial rationale.
- Governance and substance should be assessed in proportion to an entity’s role, recognising the realities of collective investment structures and delegated operating models.
- Beneficial ownership and substance should be treated as ongoing governance considerations, rather than one-off structuring exercises.
A key conclusion of the paper is that the most defensible structures are those where commercial purpose, legal documentation and actual conduct tell the same story. Consistency between an entity's stated function, contractual arrangements and day-to-day operation is becoming increasingly important in demonstrating substance and managing tax risk.
Download the full paper below to explore the findings, jurisdictional analysis and practical considerations in more detail.