Foreign Investments


Non-U.S. investments (such as those in companies or certain financial instruments), often trigger filing requirements for the expat taxpayer.

Foreign Investments

Ownership of Foreign Companies

While living abroad expats sometimes start their own companies, or purchase substantial interest in existing companies.  Depending on the circumstances the Information Return of U.S. Persons With Respect to Certain Foreign Corporations (Form 5471) may be required to be filed.  This is one of the more complex forms that a taxpayer living abroad may be tasked with completing.

Foreign Mutual Funds

Mutual funds are often seen as a relatively “safe” investment tool.  While often true, when an expat invests in  in mutual funds located outside of the United States additional U.S. filing requirements can be triggered.  Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) is used when foreign mutual funds are considered to be Passive Foreign Investment Companies (PFICs) by the IRS.

Foreign Trusts

Certain foreign government sponsored savings plans (such as saving for education, or tax free savings accounts), can be considered to be foreign trusts by the IRS.  Depending on the exact nature of the account, Form 3520/3520A (Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts/Annual Information Return of Foreign Trust With a U.S. Owner) would be used to report the account owner, beneficiaries, assets, and income to the IRS.  Income earned within the foreign trust may also be required to be included in income on the taxpayer’s annual personal tax return.

If you are considered to be a U.S. person for tax filing purposes and are thinking of investing in companies or financial assets located outside the United States, please do not hesitate to contact us.

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Any tax advice herein is based on the facts provided to us and on our interpretation of tax legislation as it reads at the time the advice is provided. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. We are not responsible for updating our advice for changes in law or interpretation after the date the advice is provided. Every tax situation is different. We are not responsible for the tax implications to any individual or entity that may act on this advice.