An entity shall be treated as a controlled foreign company if the following conditions are cumulatively met: 
a) the taxpayer, alone or together with its associated enterprises, holds a direct or indirect holding of more than 50% of the voting rights or directly or indirectly owns more than 50% of the capital of the entity or is entitled to receive more than 50% of that entity's profits; 
b) the tax on profits actually paid for its profits by the entity or permanent establishment is less than the difference between the profit tax that would have been levied from the entity or the permanent establishment, calculated in accordance with the provisions regarding to the tax on profit from Fiscal Code of this Title and the profit tax actually paid for its profits by the entity or by the permanent establishment. For the purposes of this letter, the permanent establishment of an entity treated as a foreign controlled company shall not be taken into account in so far as the head office is not subject to taxation or is exempt from tax in the jurisdiction of the controlled foreign company.