CFC Rules: What Every Founder Should Know

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.

Attribution, thresholds, and exemptions

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.