Form 5471: owning a foreign company as an American

1Who has to file

Form 5471 has five categories of filers. Most Americans abroad who need it fall into one of these:

• You own 10% or more of a controlled foreign corporation: a foreign company more than 50% owned by U.S. people who each hold 10% or more. You file every year.
• You control a foreign company, owning more than 50% of it yourself.
• You reached 10% of a foreign company during the year, or became a U.S. person while owning 10% or more.
• You're an officer or director when a U.S. person acquires 10% or more.

Shares held by family members who are U.S. citizens or residents can count toward these tests. Common examples: a UK limited company you consult through, an Australian Pty Ltd, or a Costa Rican or Panamanian corporation that holds your house.

2The company's income on your return

Owning a controlled foreign corporation can put some of its income on your U.S. return each year, even if you leave the money in the company:

• Subpart F income: mostly passive income, such as interest and dividends, and some sales and services income between related companies.
• GILTI, called net CFC tested income from 2026: much of the company's other profit. If the company pays enough local tax, an exception can often take this income out.

Individuals can sometimes choose to be taxed on this income like a corporation (a section 962 election), which can lower the bill. This is where planning matters most, so we look at the company's numbers before choosing how to report.

3Penalties

The penalty for a missing or late Form 5471 is $10,000 per form, per year. If the IRS sends a notice and the form still isn't filed, another $10,000 can be added for each 30 days, up to $50,000 more. The statute of limitations on your return also stays open until the form is filed.

The penalty can apply even when the company owes no U.S. tax.

4Fixing missed forms

If you also have unfiled returns or unreported income, the Streamlined procedures catch everything up at once, Form 5471 included, without the penalty if you qualify. If your returns were filed and the income was reported, the delinquent international information return procedures may fit instead, with a reasonable cause statement. See every IRS catch-up option for expats.

Where a one-owner company is eligible, some owners have it treated as a branch for U.S. purposes (Form 8832). That replaces Form 5471 with Form 8858, and it isn't always better. We look at both.

Common questions

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