CFC rules do not apply where the controlled foreign company carries on a substantive economic activity supported by staff, equipment, assets and premises, as evidenced by relevant facts and circumstances. The above does not apply where the controlled foreign company is resident or situated in a third country that is not party to the EEA Agreement.

CFC rules do not apply in cases where the legal person or entity is resident for tax purposes in an EU member state, unless the establishment or financial activity of the legal person or entity constitutes a fictitious arrangement made essentially with the intention to avoid the applicable tax. In case the legal person or entity is resident for tax purposes in a country which is a party to the EEA agreement and an information exchange agreement is in force and implemented commensurate with the exchange of information upon request provided in Directive 2011/16/EU, CFC rules do not apply, unless the establishment or financial activity of the legal person or entity constitutes a fictitious arrangement made essentially with the intention to avoid the applicable tax.