passive foreign investment corporation (PFIC) definition

passive foreign investment corporation (PFIC)

A non-United States company which primarily derives its income from investments. A corporation is classified as a PFIC if it passes one of two tests (with a few exceptions) - the Income Test (75% or more of the company's gross income is passive income) or the Asset Test (50% or more of the company's assets produce passive income). U.S. investors who invest in PFICs most follow unique tax regulations that differ from regular investments.

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