Full Definition
CFC rules prevent individuals and companies from shifting passive income to low-tax foreign entities they control. The resident shareholder is deemed to have received the income directly. The UK, US, Germany, and France all have CFC regimes. For digital entrepreneurs setting up companies in low-tax jurisdictions while remaining resident in high-tax countries, CFC rules are the primary compliance risk.
Global Rates at a Glance
Ireland
12.5%
Corporate Tax Rate
Hungary
9%
Corporate Tax Rate
Singapore
17%
Corporate Tax Rate
United States
21%
Corporate Tax Rate
France
25%
Corporate Tax Rate
Germany
30%
Corporate Tax Rate
Switzerland
14.9%
Corporate Tax Rate
Key Facts for Expats & Digital Nomads
Corporate tax affects entrepreneurs who operate through a company. Low-tax jurisdictions (Ireland 12.5%, Hungary 9%, UAE Free Zones 0%) can dramatically reduce tax on retained profits. However, CFC rules in your country of personal residency may attribute the company's passive income directly to you.
Frequently Asked Questions
What is CFC Rules?
Anti-avoidance rules attributing a controlled foreign company's passive income to the resident shareholder. CFC rules prevent individuals and companies from shifting passive income to low-tax foreign entities they control. The resident shareholder is deemed to have received the income directly. The UK, US, Germany, and France all have CFC regimes. For digital entrepreneurs setting up companies in low-tax .
Which countries have the lowest CFC Rules?
0% corporate tax: UAE Free Zones, Cayman Islands, BVI, Bermuda. Among OECD jurisdictions: Ireland 12.5%, Hungary 9%, Bulgaria 10%. The OECD Global Minimum Tax sets a 15% floor for large multinationals (revenue >€750M).
How does CFC Rules affect expats and digital nomads?
Corporate tax affects entrepreneurs who operate through a company. Low-tax jurisdictions (Ireland 12.5%, Hungary 9%, UAE Free Zones 0%) can dramatically reduce tax on retained profits. However, CFC rules in your country of personal residency may attribute the company's passive income directly to you.
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Disclaimer: This information is for educational purposes only and does not constitute tax advice. Tax laws change frequently. Consult a qualified tax professional before making any decisions.