PFIC exposure calculator
See what the default PFIC rules cost on a non-US fund held for years.
Open itA controlled foreign corporation can be taxed in the United States before it distributes anything. This runs the inclusion, the deduction, the credit for foreign tax paid and the residual — and works out the foreign rate at which the residual disappears.
The controlled foreign corporation
US$
The tested or included income for the year, in dollars.
US$
Some versions of the regime allow a routine return on tangible business assets to be excluded. Enter your own figure, or zero where none is available.
%
The percentage deduction available to a corporate shareholder. This has changed with legislation, so enter the figure for your year rather than trusting a default.
%
The corporate rate, or your own rate if you hold through an individual.
US$
Tax actually paid or accrued by the foreign corporation on the included income.
%
Several parts of the regime allow only a portion of the foreign tax as a credit. Enter the figure for your year and your basket.
Residual United States tax
—
Combined effective rate on the income —
Foreign tax absorbs the whole inclusion —
Inclusion before the deduction—
Deduction—
Taxable inclusion—
United States tax before the credit—
Credit claimed—
Credit allowed—
Credit that cannot be used—
Residual United States tax—
Foreign effective rate on the income—
Foreign rate at which the residual disappears—
Anti-deferral, in two flavours
The United States taxes a controlling shareholder on some of a foreign corporation's income as it arises, before any dividend. The older set of rules catches particular categories — passive income, certain related-party sales and services, insurance income. The newer set catches the corporation's operating income more broadly, with a deduction and a partial credit intended to leave a lower residual rate than the domestic one.
The mechanics are the same in both cases: an inclusion, then a deduction, then a credit for foreign tax that is often only partly allowed, then whatever residual survives. The deduction percentage and the creditable share are the two levers, and both have moved with legislation — which is exactly why this calculator asks for them instead of supplying them.
The break-even rate is the number worth knowing
The last line of the readout is the one to plan from. It is the foreign effective rate at which the credit exactly extinguishes the United States tax on the inclusion. Above it, the residual is nil and the regime costs nothing in cash. Below it, every point of foreign rate you are short translates into United States tax.
That single number tells you whether a low-tax jurisdiction is actually saving the group anything, or simply moving the tax from the operating country to the United States with extra compliance attached. It also explains why a partial credit matters so much: a haircut on the credit raises the break-even rate above the headline foreign rate you might expect.
Worked example
A controlled foreign corporation earns 2 million dollars and pays 200,000 of foreign tax, a ten per cent effective rate. The shareholder is a US corporation with a fifty per cent deduction and an eighty per cent creditable share.
- The inclusion is 2 million, the deduction 1 million, so 1 million is taxable at 21% — 210,000.
- Eighty per cent of the 200,000 foreign tax is creditable, so 160,000 is allowed against the 210,000.
- The residual is 50,000, and the break-even foreign rate is the point where the credit would have reached 210,000.
Change the deduction percentage and watch both the residual and the break-even rate move. That single input has done more to the answer than the foreign rate did.
What this calculator assumes
- No statutory percentage is asserted. The deduction, the creditable share, the United States rate and any routine return on tangible assets are all inputs, because all four have changed with legislation and differ by shareholder type.
- One controlled foreign corporation, one year, one basket. Aggregation across several corporations, expense apportionment and basket limitations are not modelled.
- The credit is capped at the United States tax on the inclusion, so an excess is shown as unusable rather than refunded.
- An individual shareholder is treated very differently from a corporate one in this regime, including whether the deduction is available at all.
An estimate, not advice. This is an estimate built from what you typed, not advice on your file. Nothing here reads your documents, checks your treaty article or looks at the year you are actually in. Where the number matters, we agree a fixed fee in writing before any work starts.
Where these figures come from
- current guidance Controlled foreign corporations and Subpart F — IRS
- current instructions Form 5471 instructions — IRS
- current instructions Form 8992 — global intangible low-taxed income — IRS
Any figure prefilled in the panel above is stated with the year it belongs to and can be changed. Rates and thresholds move; a calculator that asks you for the current one stays right, and one that hides a guess does not.
What these engagements turn on
Case study 1
A US LLC Owned From Canada
The two countries classify the vehicle differently, so relief that ought to apply frequently does not and the same profit can be taxed in both hands. The engagement examines whether the structure can be changed and what the change itself costs.
Read how this one runs
Case study 2
Treaty Relief Claimed on a Cross-Border Estate
The estate article can extend a proportionate credit where the two systems would otherwise both tax the same asset. Claiming it requires a valuation and a disclosure the estate may not expect to make.
Read how this one runs
Case study 3
Never Filed a US Return — and Only Just Found Out
Born in the United States, left as an infant, and told by a bank that the returns were owed all along. The work is sequencing: establish which years are actually open, choose the catch-up route on the facts rather than filing quietly, and claim the exclusions and credits that were never taken.
Read how this one runs
Case study 4
A TFSA That Costs More Than It Saves
Canadian tax-free accounts are not tax-free to a US person, and some of them carry a reporting form of their own. The file is a review of what is held, what each account triggers on the US side, and whether the account is worth keeping once the reporting is priced in.
Read how this one runs
Case study 5
A Family Trust Abroad With Reporting on Both Sides
A trust settled in one country and a beneficiary living in another produces reporting for the trust, the settlor and the beneficiary, on different forms and different dates. The engagement maps who files what before anything is prepared.
Read how this one runs
Case study 6
A Canadian Employer With Staff in the United States
Employing someone in the US creates federal and state obligations that begin with registration, not with the first return. Which states are engaged is decided by where the work happens rather than where the company is.
Read how this one runs
Case study 7
Information Returns Missed Behind a Correct Return
The heaviest exposure on a cross-border file is often a disclosure form rather than the tax. Where the return itself was right, the procedures for late information returns turn on a reasonable-cause narrative with dates and documents behind it.
Read how this one runs
Case study 8
Coming Back to Canada After Years Abroad
Returning restarts Canadian residence and re-values what you own on the day you arrive. Foreign pensions, employer plans and accounts opened abroad each land differently, and the reporting thresholds are tested against the whole portfolio rather than each account.
Read how this one runsAll case studies — every published engagement in one place.
Core International & Cross-Border Tax Services
International Tax Planning & Advisory
Strategy and compliance for income, assets and families spread across borders.
One coordinating team: filings on every side of the border are sequenced so treaty relief and foreign tax credits are claimed once — and in the right country.
U.S. & Cross-Border Tax Returns
Dual filers: U.S. citizens in Canada and Canadians with U.S. income run two parallel systems — we prepare both, in the right order, every year.
Expat & Emigration Tax
The move year is its own project: the elections and valuations filed that year decide the next decade of both countries’ returns.
Non-Resident Canadian Tax
Default withholding is 25% of gross: elective returns routinely turn over-withheld rent and pensions into refunds.
Transfer Pricing & BEPS
Documentation prepared with the return is the cheapest insurance in international tax; reconstructing it during an audit is the most expensive.
Tax Treaties & Withholding
Relief is only as good as the paperwork claiming it — we build treaty positions that survive review on both sides.
Cross-Border Estates & Trusts
Wills drafted for one country routinely misfire in the other — deemed disposition here, estate tax there, credits in between.
Global Investments & Reporting
Information returns carry the sharpest penalties — $25 a day whether or not any tax is owing. We keep them clean and on time.
Cross-Border Corporate Tax
Expansion raises the same four questions every time — entity, PE, repatriation, payroll. We answer them before the tax authorities do.
India Tax for NRIs & Returning Residents
The deduction is taken on the sale price, not the gain — which is why an NRI property sale strands cash unless the certificate is applied for before closing.
Canadian Tax with a Foreign Element
Residency is decided on facts, not on a form — and the year you arrive or leave is the one where the largest amounts turn on the smallest details.
UAE Tax for Expats & Their Home Country
A zero-tax country is only half the answer — the question that decides the bill is whether the country you came from still treats you as resident.
Industries & Client Types We Serve Worldwide
Global E-commerce & Marketplaces
Technology & SaaS
Professional Services Firms
Cross-Border Real Estate
Importers, Exporters & Manufacturers
Athletes, Artists & Entertainers
Remote Workers & Digital Nomads
Investment Funds & Holding Companies
Global E-commerce & Marketplaces
- Foreign VAT / GST / sales tax registrations
- Marketplace withholding reviews
- Inventory nexus & PE analysis
- Multi-currency books reconciled
Who We Serve:
Technology & SaaS
- Cross-border revenue sourcing & withholding
- IP structuring with real substance
- Equity for cross-border teams
- U.S. expansion: entity & PE setup
Who We Serve:
Professional Services Firms
- Reg 105 / 102 waivers
- Permanent establishment risk
- Partner mobility planning
- Cross-border withholding recovery
Who We Serve:
Cross-Border Real Estate
- Section 216 rental returns
- FIRPTA withholding recovery
- Section 116 clearance
- Treaty credit optimization
Who We Serve:
Importers, Exporters & Manufacturers
- Transfer pricing documentation (s.247)
- Customs value vs transfer price
- Foreign affiliate reporting (T1134)
- Country-by-country reporting
Who We Serve:
Athletes, Artists & Entertainers
Performance income is taxed where earned — Regulation 105 in Canada, withholding agreements in the U.S. — with special treaty articles overriding the usual rules.
Performance income is taxed where the performance happens, and the deduction is usually taken at source on the gross fee before expenses. Recovering the difference is a filing exercise in the other country, and it only works if the tour, the residency and the withholding certificates were documented while the work was being done.
- Reg 105 & U.S. CWA agreements
- Multi-state & country calendars
- Touring income allocation
- Royalty & image-rights withholding
Who We Serve:
Remote Workers & Digital Nomads
- Residency analysis before moving
- Employer payroll exposure
- Totalization & social security
- Foreign tax credits
Who We Serve:
Investment Funds & Holding Companies
- Treaty access & PPT reviews
- FAPI & surplus computations
- Withholding-efficient routing
- Governance & substance
Who We Serve:
