income (often determined net of expenses) generally includes income received by the CFC: From investment or passive sources, including Interest and dividends from unrelated parties, Rents from unrelated parties, and Royalties from unrelated parties; From purchasing goods from related parties or selling goods to related parties where the goods are both produced and for use outside the CFC's country; From performing services outside the CFC's country for related parties; From non-operating, insubstantial, or passive businesses, or Of a similar nature through lower-tier partnerships and/or corporations. In addition, many CFC rules treat as a deemed dividend earnings of the CFC loaned by the CFC to domestic related parties. Further, most CFC rules permit exclusion from taxable income of dividends paid by a CFC from earnings previously taxed to members under the CFC rules. CFC rules may have a threshold for domestic ownership, below which a foreign entity is not considered a CFC. Alternatively or in addition, domestic members of a foreign entity owning less than a certain portion or class of shares may be excluded from the deemed income regime. Belgian law The Belgian CFC legislation is incorporated in article 185/2 of the Belgian Income Tax Code. Belgium has chosen the transactional approach rather than the entity approach. However, Belgian CFC legislation is obsolete in practice given that the application of Belgian transfer pricing rules (i.e. article 185, § 2 of the Belgian Income Tax Code, allowing the Belgian tax authorities to implement an upwards adjustment of the profits in case of a breach of the arm's length principle) take precedence over CFC legislation. United States Subpart F rules Enacted in 1962, these rules incorporate most of the features of CFC rules used in other countries. Subpart F was designed to prevent U.S. citizens and resident individuals and corporations from artificially deferring otherwise taxable income through use of foreign entities. The rules require that: A U.S. Shareholder of a Controlled Foreign Corporation ("CFC") must include in their/its income currently Their/its share of Subpart F Income of the CFC ("Subpart F income"), Their/its share of aggregate income of 10% owned foreign corporations in excess of an aggregate return on depreciable tangible property of such 10% owned foreign corporations ("§951A"), and Their/its share of earnings and profits ("E&P") of the CFC that are invested in United States Property ("§956"), and further exclude from his/its income any dividends distributed from such previously taxed income.