🇷🇺CFC (Controlled Foreign Company): Master Guide to Regimes and Residency Strategies

Concept

Controlled Foreign Company (CFC, "КИК" in Russian-language context) is a foreign company controlled by a tax resident of another jurisdiction. CFC regimes allow tax authorities to "pierce through" the corporate veil and tax undistributed profits of a foreign company at the level of the controlling person. An official implementation reference is the EU Anti-Tax Avoidance Directive.

This guide is a hub for all key CFC regimes that may affect HNWI structures, and for mitigation strategies through individual tax residency planning. Company-level structuring is addressed separately — see holding structures.

Before any strategy, the regime itself has to be read as a sequence of separate tests. Every CFC system asks the same six questions in order — who is a controlling person, what counts as a controlled structure, whose income the profit becomes, what is excused, what happens when cash is actually paid out, and what survives when control ends — and each question has its own subject, its own base and its own consequence. Almost every expensive CFC mistake comes from merging two of these stages into one, so this guide keeps them apart in a single test map before turning to strategy. Two upstream questions sit outside the map and are decided first: whether the person is a tax resident at all — or, for a corporate owner, where the company itself is resident — and how the foreign vehicle is classified for tax purposes.

One example, six stages. A Russian tax resident owns 100% of a Cyprus company; its financial-year profit is RUB 60m and nothing is paid out (fictional figures, reused in the scenarios below). Stage 1 — at 100% the owner is a controlling person (Art. 25.13(3) Tax Code). Stage 2 — a Cyprus company that is not a Russian tax resident is a controlled foreign company (Art. 25.13(1)).

Stage 3 — the RUB 60m is deemed the owner's own income for the year in which it is measured, because it exceeds the RUB 10m floor (Art. 25.15(2)–(3), (7)); for an individual it forms a separate personal-income-tax base (Art. 210(2.1)) taxed on the progressive scale of 13% to 22% (Art. 224(1)).

Stage 4 — if the company documents that passive income is 20% or less of its total, it is an active foreign company and the tax, but only the tax, falls away (Art. 25.13-1(1), (3), (9)). Stage 5 — if instead the profit is paid out as dividends, the attributable profit shrinks by the same amount and the dividends are taxed as dividends (Art. 25.15(1)).

Stage 6 — the participation notice and the annual CFC notice are due in every variant, and their absence costs RUB 50,000 and RUB 500,000 per company respectively (Art. 129.6). The same facts produce different answers for a US or UK owner — that is what the test map below shows.

Three trade-offs run through every regime and explain why no single fix works:

• Attribution versus distribution. The regime taxes profit that has not moved; relief is bought either by paying out (stage 5) or by proving an exemption (stage 4), and each route carries its own proof.
• Tax versus reporting. Exemptions remove tax; nothing short of losing residency or losing control removes the notices, and the penalties do not depend on whether tax was due.
• Title versus control. Every regime looks through the name on the register to retained powers: a trust, a nominee or a family split changes who holds title, not the answer to the control test.

CFC regimes operate at the level of the beneficiary's tax residency. Changing residency is the only way to exit a strict CFC regime without restructuring ownership. US persons are an exception: citizenship/green card follows the individual; expatriation under IRC §877A is the only path.

Core CFC Regimes: Overview

Detailed guides:

• CFC (Russia): CFC declaration
• US CFC: Subpart F + GILTI/NCTI + §962 election
• UK CFC: TIOPA 2010 Part 9A + TOAA
• EU ATAD I CFC: Articles 7-8 and MS implementation

The CFC Test Map: Six Questions in Sequence

A CFC analysis fails most often where separate tests are merged into one. “Do I have a CFC problem?” is really six questions asked in order. Each has its own subject (who is tested), its own base (what is measured) and its own consequence (what switches on or off). The stages are independent: a person can be a controlling person yet owe no tax because an exemption applies at stage 4, and can owe no tax at all yet still owe notifications at stage 6 with six-figure penalties attached. The table compares how three contrasting regimes answer each question — the answers do not generalise to other countries.

The comparison shows why no conclusion transfers between stages or between countries: Russia tests individuals directly and reaches trusts at stage 2; the US tests individuals directly but reaches trusts through a different code entirely; the UK does not apply its CFC charge to individuals at all, yet catches them at stage 1 of a parallel regime (TOAA) with its own exemption logic. Detailed statutory walkthroughs: Russia, United States, United Kingdom, EU ATAD.

Distribution: when double taxation is removed — and when it is not

Relief at stage 5 is conditional in every regime, and the conditions differ. In Russia the same profit is shielded twice over, but each shield has a trigger: dividends paid out of the financial-year profit reduce the attributable CFC profit itself (Art. 25.15(1)), while dividends paid later out of profit the person already declared are exempt only up to the amounts actually shown in past returns and only outside fixed-profit years (Art. 217(66)). In the US the shield is mechanical: once an amount has been included under §951(a) it becomes previously taxed earnings and profits, and its actual distribution is excluded from income (§959). What no regime does is exempt a distribution merely because the profit was “earned long ago” — undeclared prior-year profit arrives as ordinary taxable income, and for US beneficiaries of foreign trusts the throwback rule (§§665–668) prices the delay at prior-year top rates plus interest.

Ceasing control is a dated event, not a retroactive eraser

Exit works prospectively. In Russia the test is annual: losing tax residency, or dropping below the participation thresholds before the measurement date of Art. 25.15(3), removes attribution from that measurement forward — but notifications and tax for periods when control existed survive, including the final resident year's filings. In the US, CFC status attaches if the >50% test is met on any day of the year, and for taxable years of foreign corporations beginning after 31 December 2025 the income inclusion is split between US shareholders by days of ownership (§951(a)(2) as amended by P.L. 119-21) — the old “whoever holds on the last day of CFC status” rule no longer lets a seller zero out the year; a sale merely converts the built-up untaxed earnings into a deemed dividend on the way out (§1248). Nothing in either regime erases obligations that had already crystallised.

Individual or company as the controlling person: what changes

The six questions are the same for a person and for a company, but the answers at stages 3–5 are not. Which taxpayer sits at the top of the chain decides the base the profit lands in, the rate, whether a lump-sum alternative exists and which relief later removes the second layer of tax.

For the example above the consequence is concrete: the same Cyprus profit of RUB 60m attributed to a Russian individual is taxed on the progressive scale, with the fixed-profit lump sum as an alternative; attributed to a Russian holding company it is taxed at a flat 25% with no lump-sum option — and interposing a domestic company between the person and the CFC does not remove the person's own dividend tax when the profit finally reaches them.

Family and indirect holdings: why splitting the shares rarely works

Stage 1 is where most restructurings are attempted and most fail, because every regime counts holdings the person does not formally own.

• Russia. An individual's participation is computed under Art. 105.2 and includes participation held jointly with the spouse and minor children (Art. 25.13(5)); control exercised in the interests of a spouse or minor children counts as the person's own (Art. 25.13(6)). Adult children are not aggregated — but the second threshold catches a family anyway: any Russian resident above 10% is controlling once Russian residents together hold more than 50% (Art. 25.13(3)). The facts that change the answer are the co-holders' residence and age, not the percentages.
• United States. Constructive ownership applies the family rules of §318(a)(1) — spouse, children, grandchildren and parents — through §958(b), with one decisive modification: stock owned by a nonresident alien is not attributed to a US citizen or resident (§958(b)(1)), so a US person's stake is not enlarged by an NRA spouse's shares. For taxable years of foreign corporations beginning after 31 December 2025 the restored §958(b)(4) also stops attribution downward from a foreign person to a US person, so a foreign parent's stock no longer turns its US subsidiary's foreign affiliates into CFCs (P.L. 119-21). That does not close the subject: the same section of the Act enacted §951B, which builds a parallel regime for foreign controlled structures with the same effective date. A US person that would be a US shareholder at a "more than 50 percent" threshold with §958(b) read without paragraph (4), and a foreign corporation that would be a CFC on the same substitutions, are subject to subpart F and the §951A regime separately from, and in addition to, the ordinary application. The line falls where it always does: an inclusion under §951(a) requires ownership within the meaning of §958(a), so status arises more widely than the inclusion (US detail). Shares held through a foreign trust or partnership are attributed to beneficiaries and partners proportionately (§958(a)(2)).
• United Kingdom. Part 9A aggregates UK persons for control (s.371AA) and connected or associated persons for the 25% chargeable-company test (s.371BD). For individuals the question is who made the transfer. In HMRC v Fisher [2023] UKSC 44 the family's company, Stan James (Abingdon) Ltd, moved its telebetting business to a Gibraltar company owned by the same family, and HMRC charged the shareholders under TOAA as "quasi-transferors". The Supreme Court (Lady Rose, unanimous) held that the transferor was the company, not its shareholders: the code targets individuals who transfer the assets that generate the income, and a test that would catch anyone who failed to prevent a company's sale was unworkable. A shareholder is not a transferor merely because they control the transferring company; a transfer made, or procured, in the individual's own name remains caught.

Fictional check of stage 1. A BVI company is owned 24% by a Russian resident and 76% by an unrelated Dubai resident: the Russian holder is not a controlling person — not above 25%, and Russian residents together hold 24% — unless they exercise control in fact (Art. 25.13(6)–(7)).

Moved to the Russian holder's spouse, the 76% counts jointly with the holder's share: 100% for both (Art. 25.13(5)). Moved instead to four Russian-resident adult children at 19% each: none is aggregated with the parent, but each holds more than 10% and Russian residents together hold 100%, so all five are controlling persons (Art. 25.13(3)).

Now with the 24% holder a US citizen and the 76% held by an NRA spouse: the citizen is a "United States shareholder" (≥10%, §951(b)), but US shareholders together own only 24%, so the company is not a CFC (§957(a)) because §958(b)(1) blocks attribution from the NRA spouse; were the spouse a US person, the company would be a CFC at 100%. The deciding fact in every variant is the co-holder's status, never the size of the stake.

Where the EU directive sits on the map

ATAD answers the six questions for corporate taxpayers only (Art. 1 of Directive (EU) 2016/1164); what happens to a resident individual is national law.

Stages 1–2: an entity or permanent establishment is a CFC where the taxpayer, alone or with associated enterprises, holds more than 50% of voting rights, capital or profit entitlement (Art. 7(1)(a)) and the corporate tax it actually paid is less than half of what the taxpayer's own state would have charged (Art. 7(1)(b)).

Stage 3: Option A attributes the listed passive categories unless the CFC carries on a substantive economic activity supported by staff, equipment, assets and premises (Art. 7(2)(a)); Option B attributes only income from non-genuine arrangements put in place for the essential purpose of a tax advantage (Art. 7(2)(b)) — in both cases pro rata to the participation (Art. 8(3)).

Stage 4: an Option A state may leave out entities whose passive categories are one third or less of income (Art. 7(3)); an Option B state may leave out entities with accounting profits of no more than €750,000 and non-trading income of no more than €75,000, or profits of no more than 10% of operating costs (Art. 7(4)).

Stages 5–6: amounts already included are deducted from later distributions (Art. 8(5)) and from disposal proceeds (Art. 8(6)), and the CFC's own tax is credited (Art. 8(7)).

A state that extends the rule to individuals writes its own trigger: Italy's Art. 167 TUIR applies to "persone fisiche" and requires both limbs at once — effective foreign taxation below 15% on certified financial statements, or without them below half the Italian level (Art. 167(4)(a) as amended by D.Lgs. 209/2023, from the 2024 tax period; a 15% substitute tax on net accounting profit under comma 4-ter can be elected instead of attribution) — and more than one third passive income (Art. 167(4)(b)). Member-state thresholds, the Option A/B choice and individual coverage are compared in EU ATAD I CFC.

Does the Rule Reach the Individual? Seventeen Countries of Residence

The four core regimes above describe the systems a structure is usually built around. For a private owner the prior question is narrower: does the country where the owner lives attribute a foreign company's profit to an individual at all, and if so on what trigger. ATAD leaves that choice to each member state, and outside the EU the answer ranges from a full personal regime to no rule of any kind.

The table splits the countries into three groups, and the group matters more than any rate inside it. The first — Russia, the United States, Germany, Italy, Spain, Portugal, Sweden and Poland — treats a resident individual exactly as it treats a company, so moving shares from the person to a family holding changes the rate but not the attribution. The second changes the instrument rather than the result: France uses a separate article with a lower threshold (Art. 123 bis), the United Kingdom charges the individual through TOAA rather than Part 9A, Belgium looks through the legal construction, and the Netherlands reaches the same capital through Box 2 or Box 3. The third — Cyprus, Malta, Switzerland, Monaco, the Gulf and the Asian financial centres — has no rule that reaches the person, which is why the same countries recur as destinations on special tax regimes.

The triggers are not comparable figure by figure. Germany's threshold is simple — more than half, with related persons, at the end of the foreign company's year (§7(2) AStG) — but its low-tax line was cut from 25% to 15% (§8(5) AStG), and the attributed amount is excluded from the 25% flat rate on capital income, so it is taxed at the owner's progressive rate (§10(2) AStG). Spain counts relatives to the second degree toward its 50% and compares the foreign tax with 75% of Spanish corporate tax (Art. 91 LIRPF). Sweden sets the bar at 25% and a low-tax test measured against Swedish tax on 55% of the income (IL ch. 39 a §§2, 5). Poland imposes a separate 19% personal CFC tax. Where the facts do not establish foreign-entity status, Art. 30f(2a) presumes it for a founder-funded foundation or trust, subject to the irrevocable-transfer and actual or potential beneficiary qualifications (Art. 30f PIT Act, consolidated text Dz.U. 2026 poz. 592). Portugal reaches individuals only by reference: Art. 20(3) CIRS applies the corporate rule of Art. 66 CIRC to IRS taxpayers holding at least 25% (Portal das Finanças).

Two consequences follow for planning. A family split that stays inside a first-group country rarely works, because Germany, Spain and Sweden all add related persons to the owner's own stake. And arrival in a no-rule country ends attribution only prospectively and only if the country left does not keep taxing the person: the exit-tax table and the residence tail on tax residency basics decide how long the old regime still counts.

Mitigation Strategies Through Individual Residency

Changing the controlling person's residency is the only lever that switches a strict regime off without changing ownership, but it is a two-sided move: the country being left may impose an exit tax or a residence tail, and the country entered decides how the same CFC profit is read on arrival — the relocation matrix sets both sides out. The table below compares the entry regimes only; the full matrix of those regimes on common axes — exemption perimeter, term, entry price, presence, prior non-residence, family, election, CFC effect, social charges, exit — sits on special tax regimes.

Twelve regimes in the same two tables separate into three families, and the family decides how durable the CFC relief is. The first is the regimes that remove the rules because there are none: Singapore, the UAE, Hong Kong and Switzerland have no CFC regime reaching an individual at all, so the relief does not expire and does not depend on a certificate. The second is the time-boxed exemptions — the British FIG at four years, Spain's Beckham at six, Portugal's IFICI and Israel's new-immigrant exemption at ten, Greece and Italy at fifteen, Cyprus non-dom under the 17-of-20-years test, with a conditional paid extension available. The end of a preferential regime and the application of personal CFC rules are separate questions; the ordinary tax treatment and any extension must be assessed under each country's rules. The third is Malta's remittance basis, where source, income classification and remittance determine the result. Cyprus non-dom relief works differently: it provides an exemption from SDC on qualifying dividends and interest, subject to its conditions, rather than merely postponing tax until money is remitted. (Sources: Cyprus Tax Department: domicile; Malta Tax Administration: remittance basis).

Two of the twelve carry a trap worth naming. Portugal reaches individuals with its CFC rules, and profit attributed that way is not covered by the IFICI exemption for foreign income, so a Portuguese IFICI holder with a controlled low-taxed company is in almost the same position as before the move. Italy's forfait switches attribution off for a CFC held directly or through foreign companies, but an Italian intermediary company stays inside the rules. In both cases the regime works on the person and stops at the first domestic company in the chain — which is the single most common reason a correctly chosen residence still produces a CFC charge.

Detailed guides:

• Beckham Law
• UK FIG Regime
• Italy €300k forfait
• Singapore tax residency
• UAE tax residency
• Hong Kong

Each of these regimes switches off the CFC charge by the fact of residence, which is exactly why the departing state reads the move as something to be examined. The four markers below are no offence in themselves, but they shift the burden of proof onto the individual.

Decision Tree: Which Regime to Choose

1. What is the current position?

• US person (citizen / green card holder) → see "US-bound" scenario below
• Russian resident → see "Russian-bound"
• UK resident → see "UK-bound"
• EU MS resident → see "EU-bound"

2. Relocation horizon?

• ≤4 years → UK FIG, Singapore EP/ONE Pass
• 5–7 years → Beckham (6 years), UAE Golden Visa, Singapore PR
• 15 years+ → Italy forfait, Singapore PR, UAE Golden Visa, Hong Kong

3. Foreign income size?

• <€500k/year → ordinary regimes may be more advantageous than forfait
• €500k–€2m → Beckham, UK FIG (first 4 years), Singapore, UAE
• >€2m → Italy forfait, Singapore, UAE, Hong Kong

4. Active business or portfolio?

• Active business → Spain (Beckham + Spanish employment), UK (FIG + UK employment), Singapore (EP + 13(7A))
• Portfolio holdings → Italy forfait, UAE, Hong Kong, Singapore
• Foreign IP/IPCo → Singapore + IDI, Switzerland + Patent Box

5. Family in structure?

• Spouse + children → Italy forfait €50k/family (€25k for transfers of residence before 1 January 2026), Singapore/UAE/Hong Kong dependent visas, Beckham family extension (≤5 years spouse)
• Single → any

Scenarios by Original Residency

🇷🇺 Russian-bound HNWI

Initial situation: RF tax resident under Art. 207 Tax Code (183 days within 12 consecutive months — Art. 207(2) of the Tax Code of the Russian Federation; the final status for a tax period is settled on the total days in the calendar year, Art. 216). CFC under Ch. 3.4—with participation >25% or >10% with aggregate >50%. Alternative regime—personal income tax on the fixed profit of CFCs: from tax period 2025 the amount depends on the number of companies—RUB 27.99m for one CFC, 52.72m for two, 75.45m for three, 98.17m for four and 120.9m for five or more (Art. 227.2(2) of the Tax Code of the Russian Federation, as amended by Federal Law No. 176-FZ of 12 July 2024), i.e. roughly RUB 5m of tax per CFC; for 2021–2024 a single amount of RUB 34m applied regardless of their number.

Strategies:

• UAE: Test 3 (90 days + Golden Visa + Ejari) → 0% personal tax + 140+ DTT (including RU-UAE DTA). Russian residency ceases by the outcome of the calendar year in which fewer than 183 days were spent in Russia: 183 days within 12 consecutive months is the Art. 207(2) test, but the personal income tax period is the calendar year (Art. 216 of the Tax Code of the Russian Federation), and the final status is settled on the total days in that year (Federal Tax Service letter No. ШЮ-4-17/16342@ of 27 December 2023). There is no mid-year cessation date: CFC switches off from the first calendar year for which the person is no longer a resident. For the last resident year the filings survive — the CFC notification by 30 April of the following year (Art. 25.14(2)) and the 3-NDFL return on CFC profit, deemed received on 31 December (Art. 223(1.1)); a missed notification costs RUB 500,000 per CFC (Art. 129.6(1)).
• Singapore: EP through own SFO or GIP Option C (S$200m AUM) → 183 days → Section 13(7A) exemption. But Singapore is no longer a treaty-relief route: the Agreement between the Government of the Russian Federation and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income of 9 September 2002 formally remains in force (it entered into force on 16 January 2009), yet its Articles 5–22 and 24, together with paragraphs 3.1–7 of the Protocol to it, have been suspended since 8 August 2023 by Presidential Decree No. 585 (item 36 of the list; confirmed by Federal Law No. 598-FZ of 19 December 2023). The reduced withholding rates are gone — Russian-source payments fall back to full domestic rates (15% on dividends); only exchange of information, the mutual agreement procedure and the residence tie-breakers still operate. The value of the scenario lies in exiting Russian residency and in Section 13(7A), not in the treaty.
• Hong Kong: simple maintenance; residence on the IRD criteria — ordinarily resident, or more than 180 days in a year of assessment, or more than 300 days in two consecutive years of assessment (s.50AAC Inland Revenue Ordinance, Cap. 112); territorial regime.
• Spain Beckham: if business relocation to Europe; 24% up to €600,000 on employment income wherever it is earned (art. 93.2.b LIRPF), 0% foreign passive, 6 years. Beckham + Digital Nomad Visa—well compatible.
• Italy €300k forfait: for UHNWI with foreign-source income >€4–6m/year. 15 years strict forfait + IHT exemption + IVIE/IVAFE exemption.

Caveat for UK: UK FIG requires 10 years non-UK residency—Russian resident usually satisfies this, but with attention to historical UK stays.

🇺🇸 US-bound (US citizens, green card holders, US residents)

Initial situation: USA—worldwide taxation on citizens and long-term residents. Cannot "exit" without expatriation (IRC §877A).

Strategies (retaining US status):

• GILTI HTE—opt-out if foreign ETR > 18.9% (per tested unit, annual)
• §962 election—individual taxed at corp rates: ~10.5% pre-OBBBA, 12.6% for taxable years beginning after 31 December 2025 (§250 deduction cut to 40%, QBAI exclusion repealed, §960(d) credit at 90% of foreign tax, so NCTI is fully sheltered at a foreign rate of about 14%)
• US C-corp blocker—individual → US C-corp → CFC: C-corp receives §250 + §245A DRD; second-level tax (qualified dividend 20% + NIIT 3.8%)
• §7701 check-the-box—election foreign eligible entity DRE / partnership (Form 8832), CFC eliminated through deemed liquidation (caveats: §367, §1248)
• Restructuring ownership below 50% CFC threshold — read against the restored §958(b)(4) and the parallel §951B
• §954(c)(6) look-through — dividends, interest, rents and royalties from a related CFC stay out of foreign personal holding company income to the extent allocable to income of the payor that is neither subpart F income nor effectively connected with a US trade or business; OBBBA struck the "before 1 January 2026" cut-off from §954(c)(6)(C) and made the rule permanent (§70351 of P.L. 119-21)
• Side-by-Side Safe Harbour — for a group with a US ultimate parent and consolidated revenue of €750m or more: at the filing constituent entity's election, top-up tax is treated as nil for IIR and UTPR purposes across all jurisdictions, joint ventures and their subsidiaries included, for fiscal years beginning on or after 1 January 2026. The United States is the only jurisdiction recorded in the Central Record as a Qualified SbS Regime. QDMTTs in the jurisdictions of presence survive and are computed without pushdown of taxes on CFCs and foreign branches; no relief is available for 2024 and 2025. The Inclusive Framework package of 5 January 2026 is administrative guidance, so in any given jurisdiction the safe harbour operates once its own law implements it (Pillar Two)

Expatriation (IRC §877A): covered expatriate on any one of three tests: net worth of US$2,000,000 or more (§877(a)(2)(B), not indexed); average annual net income tax over five years above US$211,000 for 2026 (US$206,000 for 2025) — §877A(g)(1)(A), section 4.37 of Rev. Proc. 2025-32; or inability to certify five years of compliance on Form 8854. MTM exit tax — deemed disposal of all worldwide property the day before expatriation, with an exclusion of US$910,000 for 2026 (US$890,000 for 2025), §877A(a)(3), section 4.38 of Rev. Proc. 2025-32. §2801 succession tax 40% on gifts to US persons after.

Caveats: After expatriation PFIC may apply to NRA-shareholder former US-PTEP. NRA continued ownership — 30% WHT under §871 on §884 dividends.

🇬🇧 UK-bound (UK resident HNWI)

Initial situation: UK resident under SRT. Non-dom remittance basis abolished from 6 April 2025. Worldwide arising taxation came into force; for new arrivals—FIG for 4 years. IHT—LTR test (10 out of 20).

Strategies:

• FIG regime (≤4 years): qualifying new resident with 10-year non-UK residency prior. 100% relief on foreign income/gains.
• Move to Italy forfait: UHNWI planning long-term EU base—15 years €300k for those transferring residence from 1 January 2026.
• Move to UAE: pure 0% personal tax + 140+ DTT. UK-UAE DTA in force.
• Move to Singapore/Hong Kong: for Asia-bound; territorial scope.
• Exit strategy: important to plan IHT LTR tail period (3–10 years). 10 consecutive non-UK years reset the counter.

🇪🇺 EU MS-bound

Initial situation: an individual tax-resident in an EU Member State. Check that state's personal CFC and trust-attribution rules. ATAD I Articles 7–8 set a minimum framework for corporate taxpayers; they do not by themselves impose a personal CFC charge. (Sources: EU: ATAD).

Strategies:

• Italy €300k forfait—€300k/year plus €50k per family member for those transferring residence from 1 January 2026 (Art. 24-bis TUIR as amended by Article 1, paragraph 25 of Law No. 199 of 30 December 2025, the 2026 Budget Law); Circolare 17/E of 23 May 2017, Part III §2.3, p. 59 explains that, where the CFC's country is not excluded from the Art. 24-bis option and the individual controls it directly or through foreign companies, its income is not attributed to that individual under the CFC rules; quadro FC and disclosure of the participation are also unnecessary. If control passes through an Italian company, the CFC rules apply to that company. The relief does not cover countries excluded from the option; interposition is considered separately under §2.2. 15 years reliable anchor.
• Spain Beckham—6 years foreign passive income exempt, while employment income is taxed at 24% up to €600,000 wherever it is earned (art. 93.2.b LIRPF). Substantial Spanish employment connection.
• Cyprus non-dom (17-of-20-years test; conditional paid extension available)—SDC exemption on qualifying dividends and interest; capital gains require separate analysis; 60-day or 183-day rule. Foreign passive shelter. Cyprus's ATAD CFC rule applies to resident companies only, so a non-dom individual sits outside it; the 2026 rules also allow eligible individuals without a Cyprus domicile of origin to elect two additional five-year SDC exemption periods, paying €250,000 for each.
• Greece Art. 5A ITC—€100k flat on foreign + €20k/family; up to 15 years; ≥7 of 8 non-resident; €500k investment.
• Switzerland forfait fiscal—cantonal lump-sum (≥7× annual rent or imputed rental value; federal minimum expenditure base CHF 435,000 for 2026 under Art. 14 para. 3 let. a of the Federal Act on Direct Federal Tax (DBG/LIFD), as set by art. 3 of the FDF Ordinance of 10 September 2025 on the Compensation of the Effects of Cold Progression (VKP, AS 2025 579), in force since 1 January 2026; each canton sets its own minimum); indefinite.
• Malta GRP/HNWI—15% remittance basis with min €15k.
• Portugal IFICI—20% for ten years on Portuguese employment and self-employment income in qualifying activities (art. 58-A EBF), with foreign income other than pensions exempt; it replaced NHR, which closed to new entrants on 1 January 2024.
• Move to UAE or Singapore—pure outside-EU exit.

Trust and Foundation: Title, Rights and the Tax Test Are Different Questions

The most common error in CFC planning is treating “the assets were transferred to a trust” as a tax conclusion. It is only a fact, and by itself it decides nothing.

What a transfer into trust actually does as a matter of property law: legal title passes to the trustee, who owns the assets but holds them subject to fiduciary duties owed to the beneficiaries. The beneficiary does not own the trust assets — a fixed beneficiary holds an enforceable right to defined income or capital; a discretionary beneficiary holds only a right to be considered and to due administration. The settlor drops out of ownership entirely, unless the trust deed hands powers back: revocation, a veto over distributions, the power to add or remove beneficiaries, the power to replace the trustee (these can also sit with a protector).

The tax test is a separate, fourth question — and every CFC regime answers it by looking at retained powers and entitlements, not at whose name is on the title. How the roles work is set out in how a trust works and trust taxation.

The table makes the same point four times: the property-law position is the input, and each tax test reads it against retained powers — which is why the roles are defined at trustee and protector before any tax conclusion is drawn.

• Russia (Arts. 25.13(9)–(12) Tax Code): the founder (settlor) of a foreign structure without legal personality is a controlling person by default (Art. 25.13(9)). The exit is narrow and cumulative (Art. 25.13(10)): no right to receive the profit, no right to dispose of it, no retained rights to the transferred property, and no control — and none of these merely deferred to a later date (Art. 25.13(11)). A beneficiary or any other person becomes a controlling person once they exercise control and hold a right to the income or assets (Art. 25.13(12)). A genuinely irrevocable discretionary trust with no retained settlor powers can therefore fall outside the definitions — but a single retained power, or a side understanding with the trustee, usually collapses that outcome. The full Russian analysis: trusts and CFC rules.
• United States (§§671–679, §958 IRC): a US person who transfers property to a foreign trust that has — or is presumed to have — any US beneficiary is treated as owner of that portion of the trust (§679), regardless of irrevocability and regardless of trustee discretion. The trust is then transparent, and CFC shares it holds are tested at the transferor's level as before the transfer. Even where grantor status is avoided, shares held by a foreign trust are attributed proportionately to its beneficiaries (§958(a)(2)). For a US person a trust therefore does not remove subpart F/GILTI — it normally adds Forms 3520/3520-A and, on later distributions of accumulated income, the throwback rule (§§665–668) at prior-year top rates plus an interest charge.
• United Kingdom: for a UK-resident settlor the operative codes are the settlements legislation and TOAA — a transferor who retains power to enjoy the income of the person abroad is taxed on it as it arises (ss.720–721 ITA 2007) — while a company under the trust can still meet Part 9A on its own facts. Retained powers also carry a property-law risk: in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch) the settlor was protector with a veto over distributions and the power to remove trustees, and was himself a discretionary beneficiary; the court held that on their true effect the deeds left beneficial ownership with him — the protector powers were personal, exercisable selfishly rather than as fiduciary — and, in the alternative, that the trusts were shams.

Governing-law platforms commonly used for such structures — the choice affects trust law, not the tax answer at the settlor's residence: Singapore Trustees Act 1967, Jersey Trust Law 1984 / Guernsey Trust Law 2007, Liechtenstein PGR foundation (Stiftung), Panama private interest foundation, BVI VISTA trust. The mature-client assembly remains trust → family office → holding SPV → operating satellites, with the founder's residency chosen per the scenarios above — but each layer is tested separately under the six-stage map.

Three Scenarios: One Changed Fact Each

The scenarios are fictional worked examples; figures are illustrative, not tariffs. In each pair only one fact changes, and each test stage answers separately.

Scenario 1 — same trust, different settlor powers. A settlor transfers 100% of a BVI holding company into an irrevocable discretionary trust for family beneficiaries. Variant A: the deed reserves nothing — the settlor cannot revoke, is not a beneficiary, cannot direct or veto distributions, cannot replace the trustee at will. Variant B: identical assets and beneficiaries, but the settlor is protector with a veto over distributions and a power to remove the trustee. For a Russian-resident settlor, Variant A can satisfy all four conditions of Art. 25.13(10) and end controlling-person status, while in Variant B retained control keeps it (Arts. 25.13(11)–(12)); the notifications for past periods stand either way. For a UK analysis, Variant B is Pugachev territory — the retained powers point to beneficial ownership never having left the settlor. For a US-person settlor the variants do not differ: §679 attaches to the transfer itself while any US beneficiary exists, so the CFC analysis continues at the settlor's level in both variants.

Scenario 2 — profit retained vs profit distributed. A Russian resident owns 100% of a Cyprus company whose financial-year profit is RUB 60m (fictional). Variant A — nothing distributed: the full RUB 60m is attributed as the controlling person's CFC income for the relevant tax year (Art. 25.15(2)–(3); the RUB 10m floor of Art. 25.15(7) is exceeded) and taxed as personal income; the CFC notice is due regardless.

Variant B — the company distributes the entire profit as dividends within the Art. 25.15(1) window: attributable CFC profit falls to zero, and tax falls on the dividends themselves as ordinary dividend income. Variant C — the profit was declared as CFC income in year one and distributed two years later: the dividends are exempt up to the declared amounts on proof of the earlier declarations (Art. 217(66)), unless the person was on the fixed-profit regime for those years. The US mirror of Variant C is automatic rather than proof-based: a §951(a) inclusion creates previously taxed earnings and profits, and the later actual distribution is excluded under §959.

Scenario 3 — control ends mid-year. The same Russian resident sells the entire Cyprus holding to an unrelated buyer in June, before any profit-distribution decision. Attribution for the pending financial-year profit is measured on the decision date or, absent a decision, on 31 December of the following year (Art. 25.15(3)) — on that date the seller's share is zero, so that profit is not attributed to them; but the sale itself is a taxable disposal, the participation-change notice is due within three months, and CFC notices and tax for the years control existed survive in full.

If a distribution decision had been taken before the sale, the measurement date shifts and the answer changes — the deciding fact is the date, not the sale as such.

A US seller in the same June sale includes under §951(a) its share of subpart F income and NCTI for the days it held the stock before the sale (for taxable years of foreign corporations beginning after 31 December 2025 — P.L. 119-21; before that the inclusion went to whoever owned the stock on the last day of CFC status), and §1248 recharacterises the gain as a dividend to the extent of the company's untaxed earnings — exit converts the deferral, it does not erase it. Under UK Part 9A, apportionment tracks the accounting period, so profits of the pre-sale period do not disappear either.

Comparison Matrix

Glossary

• CFC (Controlled Foreign Company)—foreign company under control of a tax resident of another jurisdiction. "КИК" in Russian-language context—"Controlled" "Foreign" "Company".
• GILTI / NCTI (Global Intangible Low-Taxed Income / Net CFC Tested Income)—IRC §951A, US CFC mechanism for attribution of net tested income; OBBBA 2025 renamed to NCTI.
• Subpart F—IRC §§951–965, US CFC mechanism for attribution of passive income categories.
• §962 election—IRC, individual elects corp-rate taxation on GILTI/NCTI.
• TIOPA 2010 Part 9A—UK CFC charge regime.
• TOAA (Transfer of Assets Abroad)—ITA 2007 ss.714–751, UK individuals.
• FIG Regime—UK Foreign Income and Gains regime, Finance Act 2025.
• ATAD I—Council Directive (EU) 2016/1164.
• Option A / Option B—ATAD CFC implementation choices.
• Substance—economic reality of company: staff, office, CIGA.
• Beckham Law—impatriate regime, Art. 93 LIRPF (Ley 35/2006 of 28 November). Introduced by Ley 62/2003 of 30 December 2003, on fiscal, administrative and social order measures (BOE No 313 of 31.12.2003), with effect from 1 January 2004—as paragraph 5 of art. 9 of Ley 40/1998; Real Decreto 687/2005 of 10 June 2005 only regulated its application in the IRPF Regulations (RD 1775/2004); it did not introduce the regime.
• Forfait—Italian neo-residenti regime, Art. 24-bis TUIR: €300k/year + €50k per family member for those transferring residence from 1 January 2026 (Art. 1, para. 25 of Law No. 199 of 30 December 2025, in force 1 January 2026; para. 26 keys the figures to the date of transfer of residence under Art. 43 of the Italian Civil Code); €200k + €25k from 10 August 2024; €100k + €25k earlier.
• LTR (Long-Term Resident)—UK IHT test from 6 April 2025.
• SRT (Statutory Residence Test)—UK tax residency test.
• OWR (Overseas Workday Relief)—UK relief for foreign employment income.
• TRC (Tax Residency Certificate)—UAE / Singapore / etc. certificate for DTT claims.
• GIP (Global Investor Programme)—Singapore EDB programme for HNWI with PR.
• PFIC—IRC §§1291–1298, US passive foreign investment company regime.
• Pillar Two—OECD/G20 GloBE rules, 15% minimum tax for MNE ≥€750m.