Owned by C corporation

Taxation of CFC income Taxed currently under GILTI ; 50 % ( 28.5 % after 12 / 31 / 22 ) deduction

Owned by S corporation

Tax currently under GILTI ; no deduction for GILTI

Foreign tax credit

Credit against GILTI for taxes paid by CFC ; owner often has no residual tax after credits

Tax on income Income taxed at entity level ; shareholder distribution taxed to SH as dividend at 15 / 20 %

No credit against GILTI for taxes paid by CFC

Income taxed at shareholder level in current year ; no tax on distribution

Ownership of Controlled Foreign Corporation

Owned by C corporation

Taxation of CFC income Taxed currently under GILTI ; 50 % ( 28.5 % after 12 / 31 / 22 ) deduction

Owned by S corporation

Tax currently under GILTI ; no deduction for GILTI

Foreign tax credit

Credit against GILTI for taxes paid by CFC ; owner often has no residual tax after credits

Tax on income Income taxed at entity level ; shareholder distribution taxed to SH as dividend at 15 / 20 %

No credit against GILTI for taxes paid by CFC

Income taxed at shareholder level in current year ; no tax on distribution