IRS Form 5471 – A Guide For US Expat Owners Of Foreign Companies

Attention US owners of foreign companies! If you haven’t already heard about it, brace yourself for IRS Form 5471 – one of the most complex and constantly changing tax forms that US-owned foreign companies may have to file. Don’t be fooled by thinking that filing requirements only apply to those with a large ownership percentage – even if you own a small stake, you may still be required to file.

This Form 5471 information return may not impact the amount of tax you pay. But be warned: it requires accurate information and disclosures. And if you fail to file, you can face stiff penalties of $10,000 and more. That’s right, this is not a drill!

We cannot stress enough the importance of seeking guidance from a tax professional who can help you navigate this labyrinthine form based on your unique circumstances.

In this article we give a general overview of this extremely complex tax form. Please consult a tax professional for guidance in your specific situation.

We cover the following:

• What Is IRS Form 5471?
• Who Must File IRS Form 5471?
• What Is A US Person?
• Who Is Considered A Shareholder Of A Foreign Corporation?
• Attribution Rules for Form 5471
• What Is A Foreign Corporation For US Tax Purposes?
• CFC – Controlled Foreign Corporation
• SFC – Section 965 Specified Foreign Corporation
• Different Categories Of 5471 Filers
• When To File Form 5471?
• 5471 Penalties For Failure To File
• Multiple Filers For The Same Foreign Corporation
• Schedules You May Need (Quick Overview)
• Form 5471 Triggers and Common Mistakes
• Form 5471 FAQ for US Expats
• Get Help With Filing Form 5471 For A US-Owned Foreign Business

What Is IRS Form 5471?

Form 5471 is an “Information Return of US Persons with Respect to Certain Foreign Corporations” (its official name). The purpose is not taxation but disclosing information, hence “information return”. The US government wants to know who owns what overseas to prevent US taxpayers from hiding assets.

The form itself is complex with different categories of filers and a long list of Schedules. To make matters worse, the form keeps changing and getting even more complicated. The IRS updated Form 5471 again for the 2024 tax year.

Recent updates clarified rules for GILTI, Subpart F, and related-party transactions on Schedule I-1 and Schedule P. Always verify that you’re using the current year’s version before filing.

Who Must File IRS Form 5471?

Any “US person” that is an officer, director, or shareholder in certain foreign corporations must generally file Form 5471. Many US taxpayers think that this wouldn’t apply to them. However, the filing requirement is broader than you may think.

In general, any US person that has at least 10% ownership in a foreign corporation must file Form 5471. Read on to see how the IRS defines 10% ownership – it’s not only what you own directly.

And just because the foreign country may not call your foreign business a corporation, the IRS still might.

As you can see, it can already be a challenge to determine who must file.

Even small business owners or startup investors abroad may qualify. The key factor is ownership percentage, including shares attributed through family or business entities.

What Is A US Person?

A US person is not only a US citizen, green card holder, or resident. It also includes US corporations, partnerships, trusts, and estates. Even a US tax-exempt entity may have to file.

Also, expats claiming treaty benefits on Form 8833 remain US persons for the purpose of Form 5471. However, claiming treaty non-residency doesn’t remove your filing duties, as Form 5471 is based on US citizenship and ownership, not tax residence status.

Who Is Considered A Shareholder Of A Foreign Corporation?

Any US person that owns directly, indirectly, or constructively 10% or more of the voting power or the value of the shares of a foreign corporation is a shareholder for the purpose of Form 5471. It’s important to understand what “indirectly” and “constructively” mean.

In practice, shareholders include individuals or entities that directly or indirectly hold stock, voting rights, or the right to receive distributions. Nominee and beneficial ownership also count toward the threshold.

Also, it is important to consider so-called “attribution rules” when determining ownership.

Attribution Rules for Form 5471

Attribution rules help determine who is considered a shareholder of the foreign corporation for tax purposes. Here is a list of attribution rules for foreign corporations according to the IRS:

Ownership By Individuals

Shares owned by an individual are attributed to their spouse, children, grandchildren, and parents. Ownership by a partnership or LLC is attributed to its partners or members.

Ownership By Entities

Shares owned by a corporation are attributed to any individual who owns more than 50% of the corporation’s stock. Ownership by a partnership or LLC is attributed to any partner or member who owns more than 50% of the entity.

Controlled Foreign Corporations

The IRS has rules for determining who is considered a “United States shareholder” of a Controlled Foreign Corporation (CFC). A United States shareholder generally includes any U.S. person who owns 10% or more of the total combined voting power of all classes of stock of a CFC. We explain in a moment what a CFC is.

After the 2017 tax reform, the rule also applies to 10% of the value, not only voting power.

Family Attribution

Shares owned by one family member can be attributed to another family member if certain conditions are met. For example, shares owned by a parent can be attributed to their child if the parent and child own more than 50% of the stock of a foreign corporation between them.

Partnership Attribution

Shares owned by a partnership can be attributed to its partners if the partnership owns 50% or more of the stock of a foreign corporation.

Trust Attribution

Shares owned by a trust can be attributed to its beneficiaries if certain conditions are met. For example, shares owned by a foreign trust can be attributed to its U.S. beneficiaries if the U.S. beneficiaries have the right to receive distributions from the trust.

So, even if you own less than 10% directly, with the attribution rules your ownership can exceed the 10% threshold.

This is why ownership analysis should always include family members, holding companies, and trusts, not just direct shareholding.

What Is A Foreign Corporation For US Tax Purposes?

The US government provides a list of business entities formed in foreign jurisdictions that it treats as foreign corporations for US tax purposes. But it doesn’t stop there. Even if your business is not on that list, if it is classified as a “per se corporation”, it is considered a corporation for US tax purposes. Therefore, it would have a 5471 filing requirement if it qualifies under any of the category of filers.

You can already see why this is one of the most complicated IRS forms. For help with filing this form, or determining if you have to file, please schedule a consultation with our expat tax experts.

Common examples include GmbH, S.A., Ltd., or SARL,  all automatically treated as corporations (“per se” entities) unless the IRS classification rules allow otherwise.

Before we describe the different categories of filers, there are two more important definitions regarding 5471:

• CFC – Controlled Foreign Corporation
• SFC – Section 965 Specified Foreign Corporation

CFC – Controlled Foreign Corporation

The IRS defines a Controlled Foreign Corporation (CFC) as a foreign corporation in which US shareholders combined own more than 50%, with each owning at least 10%, on any day during the year.

Just as we explained earlier for shareholders, the 50% can be the combined voting power or the total value of shares. Again, indirect and constructive ownership also count, so be aware of the attribution rules.

CFC status often brings additional tax consequences under Subpart F and GILTI. These rules require reporting undistributed earnings, even if no dividends were paid.

SFC – Section 965 Specified Foreign Corporation

A Section 965 Specified Foreign Corporation (SFC) is either a CFC or a foreign corporation that has at least one US shareholder that is a corporation.

If the US shareholders don’t own more than 50% of the vote or value, the foreign corporation would not be a CFC but can still be a SFC. Form 5471 Category 1 filers applies to SFCs.

Although the Section 965 “transition tax” mainly applied to past years, the SFC classification still appears in certain reporting categories.

Different Categories Of 5471 Filers

The IRS defines five different the categories of filers for Form 5417. The category of filer determines which sections of the tax form and which schedules must be completed.

We give an overview of the 5471 categories below. The 5471 Instructions go into detail about each category and the schedules required under each category.

Category 1 – US Shareholder (SFC)

A Category 1 filer is a US shareholder of a SFC (see definitions above) at any time during the tax year of the SFC and who owned that stock on the last day in the year it was an SFC.

Category 2 – Officer Or Director

A US person that is an officer or director of a foreign corporation in which a US person acquires 10% ownership. (The officer or director can own less than 10%.)

Category 3 – Additional Acquisition Of Stock

Generally, a US person that gains 10% stock ownership when they acquire stock or additional stock. Also, a US person that disposes of stock to reduce their ownership below the 10% threshold.

This category also includes a non-US person with at least 10% ownership who then becomes a US person in that year. If you plan to become a US resident, don’t forget about pre-immigration tax planning.

Category 4 – Control Test

A US person who controls a foreign corporation for a period of 30 days or more during the tax year, meaning they own stock with more than 50% of the total combined voting power or of the total value of shares.

Category 5 – CFC

A US shareholder of a CFC (see definitions above) at any time during the tax year of the CFC and who owned that stock on the last day in the year it was an CFC.

As mentioned earlier, each category has specific disclosure requirements.

If you qualify under multiple categories, the IRS allows certain overlaps to be combined on one form, but all relevant schedules must still be attached.

When To File Form 5471?

Form 5471 is filed together with your individual or business tax return. Therefore, its due date is the same as for the individual or business tax return, including extensions.

For a full list of all US tax deadlines for individuals and businesses, check out our tax filing calendar.

For individuals living abroad, Form 5471 is due April 15 with an automatic extension to June 16, and can be further extended to October 15 upon request.

Corporate and partnership filers must align with their entity’s deadlines (March 17 for partnerships/S Corps or April 15 for C Corps).

5471 Penalties For Failure To File

The IRS imposes a $10,000 penalty for failing to file Form 5471 on time, for each annual accounting period of each foreign corporation. The IRS can also assess a penalty if the Form 5471 is inaccurate or missing information.

In addition, if the form is not filed within 90 days after the IRS has mailed a notice, it can charge an additional $10,000 (per foreign corporation) for each 30-day period. The maximum additional penalty is limited to $50,000 for each failure.

With these steep penalties, don’t take the risk of not filing because you’re not sure how the requirements apply to you. Talk to a tax advisor.

The IRS can also extend the statute of limitations on your entire tax return until the form is properly filed. Reasonable cause relief may apply, but it must be well documented.

Multiple Filers For The Same Foreign Corporation

Sometimes, multiple US persons meet the filing requirements for the same foreign corporation. How should they file?

Multiple filers with different ownership interests

If there are multiple filers for the same foreign corporation who have different ownership interests, each filer should complete their own section of Form 5471 that corresponds to their ownership interest.

For example, if one filer owns 30% of the foreign corporation’s voting stock and another filer owns 20%, each filer should complete their own section of the form that corresponds to their respective ownership percentages.

Joint filers with the same ownership interest

If there are multiple filers for the same foreign corporation who have the same ownership interest, they may choose to file a single Form 5471 jointly. In this case, all filers should provide their personal identifying information on the form, and the section of the form that corresponds to their ownership interest should be completed jointly.

This means that one person can file Form 5471 and associated schedules on behalf of another person with the same filing requirement.

Things to be aware of:

• If you are filing on behalf of someone else, make sure you fill out the relevant section for that.
• If someone else files on your behalf, you may also need to include a statement on your tax return.

Schedules You May Need (Quick Overview)

Common schedules attached to Form 5471 include:

• Schedule A – Stock ownership
• Schedule B – US shareholders
• Schedule C – Income statement
• Schedule F – Balance sheet
• Schedule G – Other information
• Schedule H – Earnings and profits (E&P)
• Schedules I / I-1 – Subpart F and GILTI income
• Schedule J – E&P and distributions
• Schedule M – Transactions with related parties

You may not need all of them, but missing a required schedule can make the form incomplete, and trigger penalties.

Form 5471 Triggers and Common Mistakes

Common Form 5471 expat triggers include:

• Setting up a local company (e.g., GmbH, Ltd., SARL) where you own 100% → likely CFC.
• Owning 10% of a friend’s foreign startup → Category 3 filer.
• A spouse owns shares — attribution pushes you above 10%.
• Moving to the US mid-year with existing foreign ownership → new Category 3 filer.

Common mistakes meanwhile include:

• Forgetting “value” counts toward 10% ownership.
• Leaving Schedule M incomplete.
• Using wrong exchange rates.

Misaligning E&P with local accounting profit.

Form 5471 FAQ for US Expats

Do I owe tax when I file Form 5471?

No, Form 5471 is an information return. However, it can expose income subject to Subpart F or GILTI tax.

What if I own less than 10% directly?

You may still need to file. Attribution through family or entities can push your ownership above the threshold.

My company has no income — do I still file?

Yes. Even inactive or loss-making corporations must file if ownership tests are met.

Can I avoid filing if someone else in the company does it?

Only if your ownership and information are identical to theirs. Otherwise, each shareholder must file separately.

What if I missed past years?

You can often catch up using the Streamlined Filing Procedures or by submitting with a reasonable cause statement before the IRS contacts you.

Do foreign partnerships count?

Sometimes. If the partnership is treated as a corporation under US rules, Form 5471 may still apply.

Get Help With Filing Form 5471 For A US-Owned Foreign Business

If you made it this far through the article, you understand how complex this tax form is. Even determining who has to file can be complicated, due to the attribution rules and constructive ownership.

The complexity, coupled with high penalties, make this an anxiety-inducing form for US owners of foreign businesses. We do not recommend tackling this form on your own, even if you are willing to make it through the 43 pages of instructions.

Schedule a consultation with our experienced expat tax advisors.