I'd be shocked if many EU nations required domestic incorporation just to do legal/regulatory/consulting business there. Plenty of other multinational corps operate under their primary company.

But it could be the case!

What I suspect happened with Deloitte specifically is they found a way to appear to expand globally without taking on a lot of the risk. More like brand franchising.

Which is all to say that I wouldn't doubt Deloitte Cyprus (or other branches) have shady stuff going on, but that this structure wasn't designed specifically for that purpose.