Tax Assessment Upheld: Deemed Distribution of Low-Taxed Real Estate Income

An appellant challenged a tax authority's assessment regarding the deemed distribution of income to a resident company from a foreign entity, where the resident company held a majority participation and the foreign entity's income was derived mainly from real estate in a jurisdiction with a favorable tax regime. The court upheld the assessment, reasoning that the statutory conditions for deeming the income as a hidden distribution were met because the foreign entity's income consisted primarily of passive real estate yields, thereby triggering the domestic rule designed to tax income shifted to low-tax jurisdictions via real estate holdings, regardless of whether the foreign entity generated actual taxable income under its local law.