Overview

A Passive Foreign Investment Company (PFIC) is defined under U.S. tax law. PFIC rules are intended to prevent U.S. taxpayers from securing preferential tax treatment, such as tax deferral, from investing in foreign securities in comparison with U.S. domestic securities. "Passive" isn't meant to reflect on the investment strategy of the ETF: both active and passive ETFs can be "Passive" for this purpose. 

In this context, "Passive" means stocks and bonds are used to generate income and capital gains as opposed to operating an active business.

For investors who file U.S. tax returns and want to avoid the negative consequences of owning a PFIC, we recommend checking the assets in your portfolio and referring to the websites of these assets to determine if PFIC annual information statements exist.

For example, Blackrock ETFs are PFICs, and you can visit their website for information about annual statements.

How to check if you hold PFIC ETFs

Follow these steps to check the assets held in your managed portfolio: