Do I file Form 8865 for a small foreign partnership share?
Possibly. Size alone does not answer it, because the reporting categories are not all about control. A controlling interest brings the fullest reporting, but contributing property to a foreign partnership, or acquiring or disposing of a reportable interest, can bring an obligation on a much smaller holding. So the question is not how big the stake is but which category the facts fall into, and more than one can apply in the same year. A minority investor who bought in and sold out in the same period can have more to report than one who simply held throughout.
Is a European partnership a foreign partnership for US purposes?
Often, yes. Much of what other countries treat as an ordinary business vehicle is a partnership for US purposes, and the local name is a poor guide. A professional firm's structure, a property holding vehicle, an offshore fund tier and a two-party joint venture can all fall into this category. The classification has to be worked out from the legal characteristics of the vehicle rather than assumed from its title, and it is worth doing before any money moves, because the reporting that follows can depend on events at the point of entry.
Do I file if I contributed property to a foreign partnership?
Contributing property is a category of its own. The obligation attaches to the contribution itself, which means it can arise in a year with no income, no distribution and no change in control, and on a holding far below anything that looks like a controlling stake. In practice this is the one people miss, because the event that triggered it felt like a funding step rather than a transaction. It is also the reason a contribution is worth looking at before it is made rather than after, when the reporting consequence is already fixed.
Does an offshore fund investment mean I file Form 8865?
It can, and the answer usually sits inside the fund's structure rather than at the top of it. A fund is often a stack of vehicles, and one or more tiers may be partnerships for US purposes even where the investor holds what is described simply as a fund interest. The fund's own reporting is prepared for its general investor base and may not tell a US holder what those tiers are in US terms. Working out what is actually held, tier by tier, is the first step, and it usually needs the constitutional documents rather than a statement.
Do I file Form 8865 if the partnership made a loss?
Yes, where the facts put you in a reporting category. The obligation is decided by control, contributions and dispositions rather than by whether there is tax to pay, so a loss year is reported like any other. The work is not lighter either. The schedules ask for income, allocations and balances computed on a US basis, and a foreign partnership has no reason to have prepared any of that. A local set of accounts showing a loss is the starting point for the exercise rather than the end of it.
Do I still file after selling my foreign partnership interest?
The year of the disposal is generally a reporting year in its own right, because disposing of a reportable interest is one of the categories. So the last year is often the one that most needs attention, not the one that can be skipped. It also tends to be the hardest to assemble, since the vehicle has less reason to answer a former partner's questions. Anyone planning an exit is far better placed asking for the figures while still a partner than requesting them afterwards.
Does a remote employee create a permanent establishment?
It can. One employee working from home in another country may be enough where the arrangement gives the company a fixed place at its disposal, or where that person habitually concludes contracts. Seniority and function matter more than headcount: a salesperson closing deals is a far greater risk than a developer. The exposure is corporate tax and payroll registration in that country, which is why it is worth testing before the hire rather than after. See PE risk review.
Does GILTI apply to individuals?
Yes, and it lands harder on them. An individual US shareholder of a controlled foreign corporation has the same inclusion a corporate shareholder does, but without an election gets neither the corporate-level deduction nor credit for the foreign corporate tax already paid — so foreign profit can be taxed at individual rates with no relief for tax the company paid abroad. An election to be taxed as though through a domestic corporation is usually the first thing to model. See Form 5471 and CFCs.
