Nowadays a large number of businesses are operating around the world in more than one country, being exposed to various tax jurisdictions. In order to avoid companies to take advantage of this cross-country diversity in taxation and therefore to reduce their taxes, countries have created various anti-tax prevention rules, one being the commonly named Controlled Foreign Corporation (CFC) rules. Mainly, these measures target the ability of multinational companies to transfer their income to low-taxed jurisdictions. While on the whole these rules pursue a universal template around the world, on the other hand they vary by jurisdiction. We argue that a review of the similarities and divergences is important as international organizations are considering expanding the CFC rules to better address threats of multinational tax avoidance in the 21st century. 

CFC rules, ATAD, tax system

1. Cadbury Schweppes plc and Cadbury Schweppes Overseas Ltd v. Commissioners of Inland Revenue, C-196/04
2. Council Directive (EU) 2016/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market
3. Emergency Ordinance no. 79/2017 for amending the Law no. 227/2015 regarding the Fiscal Code
4. Haribo Lakritzen Hans Riegel BetriebsgmbH and Österreichische Salinen AG v. Finanzamt Linz, Joined Cases C-436/08 and C-437/08
5. OECD (2015), Designing Effective Controlled Foreign company Rules, Action 3 – 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project
6. Paragraph 20 - OECD (2015), Action 3 – 2015 Final Report
7. Paragraph 23, Action 3 – 2015 Final Report
8. Paragraphs 37-41 of Action 3 Designing Effective Controlled Foreign company Rules, 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project
9. Paragraph 110 - OECD (2015), Action 3 – 2015 Final Report
10. Paragraph 122 - OECD (2015), Action 3 – 2015 Final Report
11. Paragraph 126-130 - OECD (2015), Action 3 – 2015 Final Report
12. Taxation of Controlled Foreign Companies: Controversies and Challenges, Andrzej Posniak, Partner - CMS Poland