European Union (EU) CFC Directive

The EU CFC Directive aims to prevent companies from avoiding taxes by shifting profits to low-tax countries through controlled foreign companies (CFCs). It sets rules requiring member states to identify and tax profits of CFCs owned by their residents, even if those profits aren't repatriated. The goal is to prevent profit shifting for tax avoidance, ensuring that companies pay fair taxes where economic activity occurs. It establishes common criteria for identifying CFCs and outlines how member states should assess and tax these companies' profits, promoting fairer and more consistent corporate taxation across the EU.