Department V — Risk · Note 013

It Seemed Simple at the Time

A field guide to structures that were cheap to build and expensive to own.

Filed 01.09.2026 8 minutes No particular jurisdiction

The structure cost nine hundred euros and took four days. This was, everybody agreed at the time, excellent value. We are now in the third year, and the accumulated cost of explaining it — to a bank, to an auditor, and to a tax authority in a country nobody had expected to hear from — has passed thirty thousand, which is a markedly less excellent number.

Cheap structures are not a trap. They are a trade, and for the first eighteen months the trade is usually sound. The difficulty is that the bill arrives in a different currency from the saving: not money, at first, but time, attention, and the gradual conversion of a founder into an unpaid compliance officer.

Section oneWhere the risk actually sits

Six places, and they are the same six every time.

R·01 Licensing The activity needs an authorisation nobody looked up before the company was registered.

R·02 Tax presence Management sits in one country, the company in another, and a permanent establishment appears without being invited.

R·03 Employment People are engaged as contractors while working as employees. The label is not the arrangement.

R·04 Banking The structure cannot be explained in one paragraph, so the account is refused or quietly closed later.

R·05 Nominees A local director hired as a formality still holds duties, signature and liability — all of them real.

R·06 Activity mismatch What the company does is not what its registration, codes or licences say it does.

Section twoWhat the client says, and what it means

None of these sentences is dishonest. Each one is simply a question wearing the costume of an instruction.

“Just the cheapest compliant option.”

Compliant with which regime? Cheapest is a decision that can only be made after that question is answered.

“We only need the company, nothing else.”

Then the bank, the tax registration and the address are somebody’s problem — and that somebody will still call you.

“The local director is just a formality.”

A director signs, owes duties and can be pursued. Formalities do not appear in enforcement records.

“They are contractors, not employees.”

Local law decides that, not the contract title. Misclassification is assessed on how the work is actually done.

“We will sort out the details later.”

Details fixed later are called restructuring, and they cost several times what checking would have cost.

Nominees are not invisibility cloaks — they are people with signatures, duties and a memory of who instructed them.

Section threeBanking punishes vagueness

Banks do not assess whether a company was properly incorporated — that is assumed. They assess whether the business logic holds together: who owns it, what it does, where the money comes from and why here. A structure built to be quiet reads, to a compliance officer, as a structure built to be unexplained. The same feature, seen from the other side of the desk.

Section fourWhen simple really is simple

It happens often, and it is worth saying plainly. A setup is genuinely simple when all of this is known before registration:

The activity, stated precisely
Ownership and control, without layers
Where management actually sits
Whether a licence applies
Whether local presence is required
Which bank is expected to say yes
Which countries the payments touch
Where tax will be owed, and by whom

Section fiveThe commercial version of this

Screening before incorporation is not an obstacle to the sale; it is the part of the sale that is actually worth money. It also changes what is being promised. Instead of “a simple company”, the offer becomes “a structure reviewed against the risks that apply to it” — longer to say, considerably shorter to defend.

And when a client insists on speed over examination, the honest answer is that simplicity is a finding, not a service level. It cannot be granted on request.

In closingThe quiet conclusion

Every simple setup is simple in retrospect, once somebody has absorbed the cost of the part that was not checked. The better route is less dramatic: pay attention before the mistake is built into the structure.

Next in the register — Note 012, Banking

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