Controlled Foreign Company Rules (CFC Rules)

With effect from 2021, the so called. CFC rules for natural persons. Similar rules have been known for some time in our income tax law for legal entities. The purpose of these rules is to tax deemed income of individuals who have companies abroad and these companies pay less or no tax. The new rules are already intended to apply to profits generated by controlled foreign corporations for 2021, with individuals having to pay the attributable tax on their deemed income as early as 2022 for 2021.

CFC rules apply not only to tax havens but also to standard countries

The CFC rules may apply to you even if you have a holding company in Austria or a service company in the Czech Republic. The basic condition for the application of the CFC rules is that the ratio between the actual tax paid and the result of the foreign company is less than 10%. And you can achieve such a ratio in any European Union country.

However, if well structured, the CFC rules, apart from increased compliance costs, may not have any negative impact on taxpayers. In fact, there are several ways in which the impact of the CFC rules can be eliminated. One of them is the application of the so called This can be used in various forms, whether for direct, indirect or indirectly derived interests.

Online training on CFC rules

As this is a sensitive topic for many Slovak entrepreneurs, we have prepared an hour-long online training course in which we deal with it in relative detail. In it you will find:

• which foreign companies are affected;
• what are the penalties for non-compliance;
• why these rules are contrary to the fundamental principles of taxation;
• how the impact of this taxation can be reduced;
• and others.

You can also view the entire topic with the CFC Rules for Individuals – Trainingpresentation: