WHITE PAPER
How Passive Foreign Investment Corporation (PFIC) Tax Rules Affect Most Americans Abroad
Understand the complex tax implications of PFICs for U.S. investors. Learn about punitive tax treatments, reporting requirements, and strategies to minimize tax burdens.
About this white paper
Our paper outlines major takeaways for U.S. taxpayers who have invested in a Passive Foreign Investment Corporation (PFIC), namely:
- Tax treatment of PFICs is highly punitive compared to U.S.-domiciled funds. It explains the filing requirements for shareholders and details three tax elections for reporting PFIC information, including:
- The Qualified Electing Fund (QEF) Election
- The Mark-to-Market Election
- The Default, or “Do Nothing,” Approach
- Beyond high tax rates, the stringent tax reporting requirements surrounding PFICs make it time-consuming and expensive to properly comply.
- One of the most effective ways to mitigate the negative financial consequences of PFIC ownership is to invest using individual securities.
Backed by GFPI Expert Research
The Global Financial Planning Institute has 10+ years of expertise in cross-border finances. We’ve analyzed years of independent data for insights into a comparison of managed fund investments across multiple countries.
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