Passive Foreign Investment Company
A Passive Foreign Investment Company is a corporation located outside of the US which either;
PFICs can include foreign-based mutual funds that meet either of the above criteria.
Should you avoid them?
Investments that are classified as PFICs are subject to strict and complex tax guidelines by the Internal Revenue Service (IRS), as outlined in Sections 1291 – 1298 of the U.S. income tax code. This means that the PFIC itself, as well as all shareholders are required to maintain accurate records of every transaction relevant to the PFIC, such as dividends received and income earned.
PFICs are taxed at a punitive rate while you hold them, and when you sell them. Along with the additional detailed reporting forms each and every year for every single PFIC you may own, the after-tax cost of these foreign funds usually makes them a bad investment to be avoided. It is always worth getting in touch with us to seek professional advice on this matter.
If you have any further questions, or would like more information, get in touch today and book an initial, no-cost and no-obligation meeting. Alternatively, e-mail your question(s) to info@pattersonmills.ch.
Patterson-Mills Sàrl acts as an Appointed Representative of Lawsons Network AG. Any financial advice is given as Appointed Representatives of Lawsons Network AG, a member of SO-FIT (a self-regulating body approved by the Swiss Financial Market Supervisory Authority (FINMA) for the supervision of the financial intermediaries. SO-FIT is also recognized by FINMA as a professional organization for laying down rules of conduct relating to the practice of the profession of independent asset manager within the meaning of the Swiss Federal Act on collective investment schemes).
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