CAN PROFITS OF A CONTROLLED FOREIGN COMPANY BE EXEMPT FROM TAXATION?

The adjusted profit of the CFC is not subject to inclusion in the total taxable income and is not subject to corporate income tax of the controlling entity under the following conditions:

• there is an agreement on the avoidance of double taxation or on the exchange of information between Ukraine and the country of location (registration) of the CFC, and (1) the CFC pays income tax at an effective rate of at least 13% or (2) the share of passive income of the CFC does not exceed 50 % of the amount of its total income;
• the total combined income of all CFCs of one controlling person is less than 2 million euros at the end of the reporting period;
• CFC is a public company whose shares are traded on a recognized stock exchange;
• CFC is a charitable organization that does not distribute income in favor of its founders.