NEW rules CFC

Hi I can tell you what I know.

A CFC is an overseas company that a UK company owns up to at least 25% of and the overseas tax rate is substantially lower than the UK corporation tax rate. It will be deemed a CFC if all the overseas company’s assets and risks are managed in the UK.

A UK company will have a CFC charge which is equal to their share of the overseas company’s profits less any overseas tax paid (just their share of the overseas tax). So if a co. owns 30% of an overseas company they will be entitled to 30% of the profits less 30% of the tax paid overseas.

However there will be no CFC charge if:

* The foreign company’s income is less than £50,000 and trade profits are less than £500,000.

* The overseas tax rate is at least 75% of the UK tax rate

* The profit margin is less than or equal to 10%

* Or the overseas company deals in investments as these companies will not be paying a low rate of tax

* I think also if the overseas company is a genuine trading company meaning if the overseas company would still continue to trade even if the UK company closed, then the overseas company would not be deemed a CFC.

Hope this helps a little. Correct me anyone if anything I said is wrong or if there is anything esle to add.

Thank you