Is my foreign mutual fund a PFIC?
Most foreign mutual funds and ETFs are PFICs under US tax law. Learn the income and asset tests, why it matters, and how to avoid the worst tax outcomes.
Your foreign mutual fund is almost certainly a PFIC if it is a foreign corporation that earns 75% or more passive income or holds 50% or more passive assets. Most foreign-domiciled mutual funds, ETFs, and unit trusts meet this definition because they pool investor money and generate dividends, interest, or capital gains. If you own shares directly or through a foreign brokerage account, you must file Form 8621 annually. Without a QEF or mark-to-market election, distributions are taxed under the excess distribution method with interest charges that can wipe out gains. Check the fund's domicile and asset mix before investing.