Only passive income (e.g. interest) is subject to CFC taxation. Passive income means any income of the CFC which is not listed in Section 8 para. 1 AStG as active income. A typical example of passive (non-active) income is interest income. Active income (e.g. from a production activity) is excluded. In certain constellations, income that is subject to the Investment Tax Act (Investmentsteuergesetz) is also excluded. 

Income from a relevant financial year is disregarded if the income does not exceed 10 percent of the total income of the foreign company, provided that the amounts to be disregarded for a taxpayer do not exceed a total of EUR 80,000.

With regard to the so-called motive test, see "Substance requirements"