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Potential GILTI relief for US individual owners of CFCs

Proposed IRS regulations confirm a deduction against GILTI has been extended to US individual owners of CFC.

Proposed Internal Revenue Service (IRS) regulations confirm a deduction against Global Intangible Low Income (GILTI) has been extended to US individual owners of Controlled Foreign Corporations (CFC).

On 4 March, proposed IRS regulations were issued which confirmed that a deduction against GILTI, previously restricted to US domestic corporations, has been extended to include US individuals who elect to be taxed as deemed corporations.

Whilst the rules are complex and result in an ever-increasing compliance burden, this potentially gives taxpayers another option to ensure they are not unduly penalised by the GILTI regime introduced as part of the tax reform in the US.

US owners of CFCs will still need to report Form 5471 with their personal US taxes. However, there are a number of additional forms, currently in draft, that US taxpayers will need to consider for 2018 and beyond.

Should you be affected by the new 2018 CFC and GILTI rules and require advice, please contact Alex Straight.

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