How CFC rules work in 2026: profit attribution, control and participation thresholds, passive income and low-tax tests, exemptions, and why a foreign company does not automatically save tax if you remain resident somewhere with CFC rules.
CFC rules (Controlled Foreign Company) let a country tax your foreign company's profit before it ever pays you a dividend. For founders the point is blunt: opening a company in a low-tax jurisdiction and parking profit there does not save tax if you remain resident somewhere with CFC rules. This guide covers attribution, thresholds, and mechanisms.
The Russian-language edition of this operator guide is the canonical version; this English summary mirrors its structure.
CFC rules attribute a controlled foreign company's profit to the controlling resident and tax it at home as if distributed, with credit for foreign tax. They use entity or transactional approaches, control thresholds (often summing related-party and family stakes), and usually target passive income below a low-tax threshold. Exemptions cover active business with substance, small profits, and high-tax jurisdictions. Crucially, CFC rules live where the beneficiary is resident, not where the company is — so a foreign company never saves tax automatically.
See the full Russian guide for the attribution walkthrough and the founder misconceptions.
INNOVA CG models the CFC effect before structuring: control thresholds, passive income, exemptions, and alignment with the founder's residency.
This material is for general information only and does not constitute legal or tax advice. Accurate as of the publication date.
