CFC (Controlled Foreign Corporation) – a foreign resident company where all of the following apply:

more than 50% of the means of control are held, directly or indirectly, by Israeli residents;

more than 50% of its income is passive (as explained in the following questions);

the foreign tax rate is ≤15%; and the company’s shares are either not publicly traded, or, if partly listed, less than 30% of the rights were offered to the public.

Taxation of CFC profits applies only to controlling shareholders, i.e., an Israeli resident who holds, alone or together with a relative, directly or indirectly, at least 10% of any means of control, either at year-end, or on any day during the tax year and on any day in the following tax year.