Is a UK investment trust a PFIC?

Any sort of non-US funds such as offshore mutual funds, UK investment trust, offshore hedge funds, etc. are considered as a PFIC.

Are UK pensions PFIC?

UK Pension – covered by tax treaty

As you do not need to pay UK or US tax on investments inside a UK pension it is generally accepted that you can invest using standard UK funds without the usual PFIC concerns.

What qualifies as a PFIC?

A passive foreign investment company (PFIC) is a corporation, located abroad, which exhibits either one of two conditions, based on either income or assets: At least 75% of the corporation’s gross income is “passive“—that is, derived investments or other sources not related to regular business operations.

Are foreign REITs PFIC?


A foreign corporation is a P.F.I.C. if either (i) 75% or more of its gross income for the tax year is passive income, or (ii) the average percentage of its assets during the tax year which produce or are held for the production of passive in- come is at least 50%.

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How do you tell if a company is a PFIC?

Under the income test, a foreign corporation is treated as a PFIC if the average percentage of the value of the assets held by such corporation (calculated on a quarterly basis) during the taxable year which produces passive income, or which are held for the production of passive income, is at least 50 percent.

How are US ETFs taxed in UK?

Stamp duty of 0.5% is charged on purchases of individual shares and investment trusts in the UK. Individual investors don’t pay this tax on their ETF purchases. However, a UK equity ETF created with shares bought on the London Stock Exchange will pay stamp duty on its underlying assets.

Do I have to pay tax on my UK pension in USA?

“The US has the right to tax the pension of a person who is a resident of the US unless the pension is exempt in the other country.” Since the person resides in the U.S., the U.S. has the general right to tax the pension distributions. If the pension is tax-exempt in the UK, it is not taxable in the U.S.

Is a UK SIPP taxable in the US?

Tax on UK pension withdrawals in the US

This means that any withdrawals from your SIPP account can be paid without any tax deducted in the UK. Income payments from your SIPP account will be subject to taxation in the US and will need to be declared to the IRS.

Is UK pension reportable on FBAR?

Most U.K. Pension Plans are reportable on the FBAR as a Foreign Bank and Financial Account. The value is exchanged into USD. If the plan is a defined benefit plan, with no surrender value other than the received distributions, the FBAR value is zero, until the filer begins to take distributions.

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What happens when you sell a PFIC?

All capital gains from the sale of PFIC shares are treated as ordinary income for federal income tax purposes and thus are not taxed at preferential long-term capital gain rates (Sec.

Do I need to report PFIC?

PFIC reporting is the requirement that US citizens or green card holders, who indirectly or directly own shares in a PFIC at any time during the year, must file Form 8621 with the IRS. As this is an additional and often complex form, you will need to pay your tax advisor additional fees to prepare these.

Who Must File PFIC?

More In Forms and Instructions

A U.S. person that is a direct or indirect shareholder of a passive foreign investment company (PFIC) files Form 8621 if they: Receive certain direct or indirect distributions from a PFIC. Recognize a gain on a direct or indirect disposition of PFIC stock.