FOREIGN COMPANIES

FORIEGN COMPANIES

A controlled foreign company or CFC is a company which is not resident in the UK but which is controlled by persons who are resident in the UK. This control may either be on a legal or economic basic, or may be a joint venture test or meet UK accounting standards.

RULES REGULATIONS AND OPERTAIONS

The rules surrounding CFCS are provision that are designed to stop UK profits from begin diverted to territories with lower tax levels. When UK profits are diverted to  controlled foreign company, the profits are then apportioned and then charged to a UK corporate interest holder with a minimum of 25% interest in the company.

It works by applying a series of charge gateways to the various kinds of profits in order to identify those who have been diverted away from the UK economy. These profits will then be apportioned before being charged to the relevant corporate interest holders in the UK. There are several entity level exemptions reflecting the fact that it is generally considered that most CFCs have been set up for purely commercial reasons and therefore they are designed to reduce the company’s compliance burden when applying these rules.

Advice for Foreign Companies

When dealing with the tax laws surrounding controlled foreign companies, it is often best to consult a firm of qualified accountants. The Accountancy Solutions is very familiar with the law and has a lot of experience in this field. The benefits available include:

  • Saving you time and effort over trying to deal with your own tax
  • Ensuring that all forms are accurately completed
  • Ensuring that you pay no more tax than necessary
  • Ensuring you remain compliant with the law
  • Timely submission of paperwork

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