CFC (Controlled Foreign Corporation)

A foreign company deemed controlled by shareholders resident in a 'home' country, triggering anti-deferral tax rules that tax the shareholders on the company's undistributed passive income. The US CFC regime (Subpart F + GILTI) applies to US shareholders of 50%+ foreign-owned corporations; most EU countries implement the ATAD CFC rules for low-taxed subsidiaries; Germany (§7-14 AStG), the UK, France, Netherlands, Italy, and most OECD countries have their own flavours. CFC rules are the main reason US expats and EU HNW individuals cannot simply move profits into low-tax offshore companies without current-year taxation at home. Typically paired with Subpart F / GILTI / ATAD reporting obligations and substantial administrative burden.