GILTI

Katelynn Minott, CPA & CEO June 23rd, 2026

GILTI, or Global Intangible Low-Taxed Income, was a U.S. anti-deferral rule requiring certain U.S. shareholders of Controlled Foreign Corporations (CFCs) to report foreign business income before it was distributed. For tax years beginning after December 31, 2025, GILTI is called Net CFC Tested Income (NCTI).

Why it matters for U.S. expats

U.S. expats who own foreign companies may owe U.S. tax on corporate profits they have not withdrawn. The rules can apply even when the company operates locally and pays foreign corporate tax.

For individuals, strategies such as the GILTI high-tax exclusion or a Section 962 Election may reduce the U.S. tax due. However, each option has different reporting requirements and consequences for future distributions.

Common questions

1. What is GILTI and how does it affect U.S. expat business owners?

GILTI can require U.S. shareholders of CFCs to report and pay U.S. tax on certain corporate profits before receiving a distribution.

2. Is GILTI still called GILTI in 2026?

No. For tax years beginning after December 31, 2025, the statutory term is Net CFC Tested Income, or NCTI.

3. Who is subject to GILTI or NCTI tax?

The rules apply to U.S. shareholders who own at least 10% of the vote or value of a CFC, including ownership attributed under IRS rules.

4. Do I owe GILTI tax if my foreign company pays no dividends?

Possibly. GILTI and NCTI are calculated from the CFC’s income, not only the money distributed to its shareholders.

5. What is the GILTI high-tax exception and how does it work?

It is an election that may exclude CFC income taxed abroad above the applicable threshold from the GILTI or NCTI calculation.

6. What is a Section 962 Election for GILTI?

A Section 962 Election allows an individual shareholder to calculate tax on GILTI or NCTI as if they were a U.S. corporation. This may provide access to corporate tax rates and indirect Foreign Tax Credits.

7. Can foreign corporate taxes reduce GILTI tax?

Potentially. Domestic corporations and individuals making a Section 962 Election may claim part of the foreign tax paid by the CFC, subject to limitations.

8. Can the Foreign Earned Income Exclusion reduce GILTI?

No. The FEIE applies to qualifying earned income from personal services, not a shareholder’s GILTI or NCTI inclusion.

9. What forms are used to report GILTI or NCTI?

Form 8992 calculates the inclusion, while Form 5471 reports information about the CFC. Additional forms may apply depending on the shareholder and elections made.

10. Does GILTI apply to a foreign LLC?

It depends on how the foreign LLC is classified for U.S. tax purposes. The rules may apply if it is treated as a corporation and qualifies as a CFC.

When to get help

Consider professional help if:

You own at least 10% of a foreign corporation.
U.S. shareholders collectively control more than 50% of your foreign company.
Your company has profits that have not been distributed.
You need to calculate tested income or tested losses.
You are considering the GILTI high-tax exclusion.
You are considering a Section 962 Election.
You received distributions from previously taxed corporate earnings.
You have not filed Forms 5471 or 8992 in previous years.

Bright!Tax can determine whether the CFC and NCTI rules apply, calculate the inclusion, compare available elections, and prepare the required reporting. Get started with Bright!Tax.

Official sources

Reviewed by

Katelynn Minott, CPA & CEO

Last reviewed

June 2026

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