Architecture, Not Evasion

"Offshore structuring is not evasion — it is architecture."

That sentence sits on this firm's capital structuring page and is usually read as a defence. It is not a defence. It is a specification. Architecture has a client, a purpose, a site, building regulations it is drawn against, and a plan that can be handed to an inspector without a covering explanation. Everything that follows it on the page — legal tax efficiency, asset protection within applicable law, operational coherence across jurisdictions — is downstream of that.

The distinction that decides which object has actually been built is easy to state and expensive to get wrong. One kind of structure is designed to be reported. The other is designed not to be found. Only the first has a future, because the reporting happens either way.

Compliance is load-bearing, not a finish

The two instruments that establish this are older than most of the structures they now govern.

The Common Reporting Standard was approved by the OECD Council on 15 July 2014. On the OECD's own list of signatories to the multilateral competent authority agreement, status as at 13 March 2025, 126 jurisdictions had signed. The United States is not among them. It operates a separate instrument: the Foreign Account Tax Compliance Act, enacted in Title V of the Hiring Incentives to Restore Employment Act on 18 March 2010, which inserted chapter 4 — sections 1471 to 1474 — into the Internal Revenue Code and requires a withholding agent to deduct 30 per cent of a withholdable payment to a foreign financial institution outside the prescribed agreement.

Three properties of that pair matter at the drawing stage, and none of them is about tax.

The reporting is done by institutions, not by owners. An account holder files nothing under either regime; a bank, a custodian, a fund administrator or a trustee files, on a schedule it controls, describing an account it has classified. The owner does not decide what is said about the structure.

The two regimes are not the same shape. One is multilateral and broadly reciprocal, resting on residence. The other is unilateral, reaches citizenship, and is enforced by withholding on a payment flow. An arrangement with a US-connected participant and a European reporting institution generates output under both, produced by different parties answering different questions.

And the outputs converge. They arrive at authorities that already hold registry data, exchange it, and can set two accounts of one arrangement beside each other. What is being designed is therefore not secrecy. It is the set of descriptions a structure will generate when it is described by people who did not build it, and whether those descriptions agree.

What improper execution actually is

It is rarely a single unlawful act. It is usually an accumulation of elements that were reasonable when installed and can no longer account for themselves.

A layer with no current purpose. Regulation (EU) 2024/1624 makes this explicit rather than merely awkward. Article 63 requires every legal entity created in the Union to hold adequate, accurate and up-to-date beneficial ownership information; where, after exhausting all means of identification, no person is identified, the entity must keep records of the steps taken and file a statement to that effect, with a justification of why identification was not possible and the details of its senior managing officials. A dormant layer is no longer a quiet thing. It is a paragraph somebody has to draft, sign and stand behind.

A nominee who cannot be explained. Article 66 requires nominee shareholders and nominee directors to hold information on the identity of their nominator and the nominator's beneficial owners, and to disclose that information, and their own status, to the legal entity — which reports it to the central register and to obliged entities conducting customer due diligence. Nomineeship is not abolished. It is converted from a discretion into a filed relationship, and a filed relationship is survivable only if it has a reason.

A jurisdiction selected for a property it does not control. Under Articles 29 and 30 the Commission designates high-risk third countries, and countries with compliance weaknesses, by delegated act adopted within twenty calendar days of the criteria being found met, with enhanced due diligence attaching to relationships involving them. The list moves in both directions on a cadence nobody outside it sets. Delegated Regulation (EU) 2025/1184 of 10 June 2025 added ten jurisdictions and removed eight, leaving a table of twenty-seven; a further delegated act of 3 December 2025, published on 9 January 2026, added one more. A structure sited somewhere for its quietness has bought an attribute held by a third party and revised on that party's calendar.

The edge that is scheduled to move

The fourth failure is the one carrying a date.

Under Directive (EU) 2015/849, a shareholding of 25 per cent plus one share, or an ownership interest of more than 25 per cent, was an indication of direct ownership. Under Article 52(1) of Regulation (EU) 2024/1624 an ownership interest means direct or indirect ownership of 25 per cent or more. The Regulation applies from 10 July 2027, directly and without transposition, save for two categories of obliged entity to which it applies from 10 July 2029.

A holding of exactly 25.00 per cent sat on one side of that line and will sit on the other. So does the arithmetic around it: indirect ownership is calculated by multiplying interests through each chain and adding the results across chains, with all shareholdings at every level taken into account, and Article 54 governs the multi-layered case in which ownership interest and control coexist at different layers of the same chain. Two separate fifteens routed to the same person were once two fractions. They are thirty.

The threshold is itself under review. Article 52(2) provides that where member states identify categories of entity exposed to higher risk, the Commission is to assess those risks by 10 July 2029 and, where a lower threshold is appropriate, adopt delegated acts setting one — capped at 15 per cent, unless a higher figure still below 25 per cent is more proportionate. Article 88 requires the Commission to report to the Parliament and the Council by 10 July 2030 on the necessity and proportionality of lowering the 25 per cent threshold outright.

The point is not the number. It is that an interest engineered to sit just under a line has taken a dependency on a variable somebody else maintains, at the one joint in the design where nothing else is holding the weight. A structure built to be reportable survives a threshold move by filing a fuller entry. A structure built around the threshold has to be redrawn, and Article 63(2) sets the tempo: changes reported to the central register without undue delay and in any case within 28 calendar days, and the entity verifying at least annually that what it holds is current. A structure is not a document delivered once. It is a thing with a maintenance schedule.

The test a design has to pass

The question is not whether an arrangement is lawful. That is counsel's question, and it is answered separately in every territory the arrangement touches.

The design question is narrower and can be asked in a room. Can each element be stated in a single sentence, and does the sentence stay the same in every place it is asked for — bank onboarding, a registrar, a tax authority, a counterparty's diligence, and eventually a court? Most arrangements that fail do not contain an illegal element. They contain an element that has to be described differently to two audiences, and both descriptions are now written down somewhere, by someone else, with a date on them.

Something that can only be explained once is already the other kind of object, whatever it was called at the outset.

We do not practise law and we do not write tax opinions. Nothing above is legal or tax advice, and none of it describes any particular structure; structures are designed alongside independent counsel in each relevant territory, tax positioning is worked out alongside a principal's own CPA and tax advisers, and a principal should take advice from an adviser unrelated to Privy Consul.

The design work sits under Transnational Capital Structuring and Cross-Border Wealth Architecture; the enquiry that tests a counterparty's structure rather than a client's own sits under KYC & Enhanced Due Diligence.