Foreign Corporation

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A foreign corporation is a corporation created or organized outside the United States. For U.S. expats, owning shares in a foreign corporation can create U.S. income tax, Form 5471, GILTI, Subpart F, PFIC, FBAR, FATCA, and Foreign Tax Credit issues.

Why it matters for U.S. expats

A foreign corporation may be treated very differently by the U.S. than by the country where it is registered. A small local company, family business, startup, or holding company can trigger complex U.S. reporting if a U.S. person owns, controls, invests in, transfers property to, or receives income from it. The filing rules depend on the corporation’s structure, ownership, income, assets, bank accounts, and whether it is a Controlled Foreign Corporation or PFIC.

Common questions

1. Do U.S. expats have to report ownership of a foreign corporation?

Yes, if they meet the Form 5471 filing rules or another international reporting requirement. Reporting can apply based on ownership percentage, control, officer or director status, acquisitions, dispositions, or CFC status.

2. What form is used to report a foreign corporation?

Form 5471 is the main U.S. information return for certain U.S. persons connected to foreign corporations. Other forms may apply depending on income, transfers, assets, accounts, and ownership structure.

3. Is a foreign corporation the same as a Controlled Foreign Corporation?

No. A foreign corporation becomes a Controlled Foreign Corporation when U.S. shareholders own more than 50% of the vote or value under the CFC rules.

4. Can a foreign corporation create GILTI for U.S. expats?

Yes. A U.S. shareholder of a Controlled Foreign Corporation may need to report GILTI on Form 8992, even if the company did not distribute cash.

5. Can a foreign corporation create Subpart F income?

Yes. Certain passive, related-party, insurance, or mobile income earned by a Controlled Foreign Corporation can be taxed currently to U.S. shareholders under Subpart F rules.

6. Can a foreign corporation be a PFIC?

Yes. A foreign corporation can be a PFIC if it meets the passive income or passive asset test. This often affects foreign investment companies, holding companies, mutual funds, and ETFs.

7. Does a foreign corporation need to file a U.S. tax return?

Not just because a U.S. person owns it. A foreign corporation may have its own U.S. filing requirement if it has U.S.-source income, a U.S. trade or business, or another U.S. tax connection.

8. Do foreign corporation bank accounts need to be reported on FBAR?

They can. A U.S. person may need to report foreign corporate accounts if they have financial interest in or signature authority over those accounts and the FBAR threshold is met.

9. Can a U.S. expat elect how a foreign corporation is treated for U.S. tax?

Sometimes. Certain eligible foreign entities can make an entity classification election on Form 8832, but some foreign entities are automatically treated as corporations under U.S. rules.

10. What happens if Form 5471 is not filed?

Missing Form 5471 can lead to significant IRS penalties and may keep the statute of limitations open for the related tax return.

Related forms

• Form 5471: Reporting foreign corporations
• Form 8992: Reporting GILTI
• Form 926: Transfers of property to a foreign corporation
• Form 8832: Entity Classification Election
• Form 8938: FATCA reporting for U.S. expats
• FinCEN Form 114: FBAR reporting

When to get help

Professional guidance is important when:

• You own shares in a foreign company.
• You are an officer or director of a foreign corporation.
• You control a foreign corporation with other U.S. shareholders.
• You transferred money, property, or intellectual property to a foreign corporation.
• You need to file Form 5471, Form 8992, Form 926, Form 8832, FBAR, or Form 8938.
• You are unsure whether the company is a Controlled Foreign Corporation or PFIC.
• You received an IRS notice about missing foreign corporation reporting.

Bright!Tax can review the foreign corporation’s structure, identify the U.S. forms required, and prepare the individual and international reporting connected to your ownership. Get started with Bright!Tax.

Related Bright!Tax guides

• Foreign companies and U.S. tax reporting for expats
• GILTI tax explained for U.S. expat business owners
• Section 962 election for U.S. shareholders of foreign corporations

Official sources

• IRS: About Form 5471
• IRS: Instructions for Form 5471
• IRS: About Form 8992
• IRS: About Form 926
• IRS: About Form 8832

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

July 2026