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Passive Foreign Investment Corporation

Acronym
PFIC
Parent
Corporation

A Passive Foreign Investment Corporation (PFIC) is any foreign corporation that meets strict standards either in income test or an asset test, which includes either: a 75% or more of its gross income is from non-business operational activities; or at least 50% of its average percentage of assets is held for the production of passive income. Unlike Controlled Foreign Exchange Corporations (CFCs), PFICs are subject to strict and extremely complicated tax guidelines by the Internal Revenue Service. PFICs include foreign-based mutual funds and startups that exist within the scope of the PFIC definition.

Entity Types

Mutual Fund

Terms

Taxes

  • Initiated under US tax rules
  • Offers preferential tax treatment to trusts
    • Long-Term gains on collectibles are taxed at capital gains rates instead of 28% collectible tax rates (gold included)

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