Tuesday, April 8, 2014

U.S. Shareholders of PFICs Must File Annual Report for 2013 and Future Years

On December 31, 2013, Temporary Treasury Regulations under Section 1298(f) of the Code were published. Under these rules, for the calendar years 2013 and thereafter, direct and indirect U.S. shareholders who are the first U.S. persons in a chain of ownership with respect to a passive foreign investment company (“PFIC”) must annually file a Form 8621 for each PFIC owned. Ownership of PFIC stock through another U.S. person may also trigger reporting requirements in circumstances where the U.S. shareholder is required to include an amount in income with respect to the PFIC. Certain exceptions may apply for U.S. shareholders who have in effect qualified electing fund (“QEF”) or mark-to-market (“MTM”) elections, or whose holdings fall below certain value thresholds.