Possible way to circumvent CFC-rules?


Offshore Agent
I've been thinking of an idea to possibly circumvent the CFC-rules in my country. I'm sorry if this has been discussed before.

Let's say that you are tax resident in Germany. Could you bypass the German CFC-rules by founding a holding company in a country that does not have CFC-regime? They are e.g. Slovenia, Slovakia, Estonia, Switzerland, Malta, etc. to name a few. Your company in a non-CFC-regime country would then own the company in low-tax jurisdiction, let's say BVI.

When you own the company in non-CFC-regime country you do not need to report that company to the German tax authorities (at least as CFC). And because the company you own is not considered as CFC then the second company owned by the first company should not also be considered as CFC (at least in my country of residence).

If the holding company in non-CFC-regime country is totally passive, it could do even without bank account, just holding some shares, it does not make any revenue or profit, it is further out of interest of tax authorities in Germany.

Of course it's totally different story then how do you make business with the offshore company.

What's good and bad in this idea?