In an environment of global deoffshorization many foreign company owners and persons controlling overseas companies may be face the challenge of submitting additional statements and paying taxes in their country even when they do not receive dividends and do not transfer the profits of their foreign companies. The rules prescribing the procedure for this type of taxation are called «rules for taxation of controlled foreign companies (or corporations)» («CFC»).
A controlled foreign company, or CFC, is as a rule a foreign company in which tax residents of another country (different from the one where the company is registered or pays taxes) hold a certain portion of shares or stocks.
Why are CFC consultations so important? As a consequence of recent changes in the legislation, the tax agencies in many countries have been granted special powers, such as obtaining data on foreign accounts and CFC from other jurisdictions (as part of automatic tax data interchange), requesting information about the taxes paid by CFC or about CFC’s assets or demanding explanations from the controlling person on all related matters.
We will give you full insight into which taxes apply to foreign company owners, which documents and returns should be filed, what penalties and sanctions may apply and whether CFC owners can avoid taxes.