The controlled foreign companies (CFC) rules will be amended from 6 December 2006, following the decision of the European Court of Justice in Cadbury Schweppes. Revenue & Customs is consulting on draft legislation to exempt profits generated by 'genuine economic activities' of employees of a CFC with a business establishment in the EU or an EEA country. The Cadbury Schweppes case returns to the UK courts in due course and may yet have a further impact on this legislation. In addition, the government has tightened the existing exempt activities test and abolished the public quotation exemption. A broader review of taxation of foreign profits is ongoing and further changes to the CFC rules may follow.