Active passive income of Controlled Foreign Companies
Due to the upcoming deadlines for reporting on controlled foreign companies (CFC), more and more taxpayers directly affected by such rules try to apply them in practice when preparing a draft of the CFC report, in particular, in terms of determining the grounds for releasing adjusted CFC's income from taxation.
In this article, we propose to dwell on such a criterion for exempting the adjusted income of the CFC from taxation, as the receiving mainly passive income by CFC (more than 50%), which is active, under the conditions of the existence of a valid agreement between Ukraine and the jurisdiction of the CFC on the avoidance of double taxation or the exchange of tax information.
In particular, it concerns the application of the exemption to such income as dividends and interest, which were quite often used to structure the income of residents of Ukraine through foreign companies in low-tax jurisdictions or jurisdictions that offer more favorable tax conditions.
The full version of the article is available in Ukrainian by the link.
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