also called Global Intangible Low-Taxed Income
A US tax on certain income of foreign companies owned by Americans, aimed at low-taxed foreign profits.
GILTI is a US tax aimed at certain income of foreign companies owned by Americans, targeting profits that were taxed lightly abroad. The sting for a nomad is that it can tax you on your own company's profits even when you have not paid that money out to yourself. So an offshore company that looked tax-efficient can still generate a US bill on paper earnings sitting inside it.
You are American and run profits through a company in a low-tax country, leaving the money in the business to reinvest. GILTI reaches in and taxes you on those profits anyway, so you owe US tax on income you never actually took out of the company.
It can tax an American owner of an offshore company on company profits they haven't taken out.
The difference is the whole point, so here is each one in a line.
These are the rules that reach through a company to tax an owner or create a tax bill abroad.
Controlled Foreign Corporation rules tax a resident on a foreign company's profits even if it never pays them out, and GILTI is the US version aimed at low-taxed foreign profits.
A PFIC is a US classification that punishes Americans holding many foreign funds, and permanent establishment is when a company's activity in a country is enough to be taxed there.
Controlled Foreign Corporation · Permanent establishment · PFIC
LOOSELY DEFINED. This term is used widely but not consistently, and its precise meaning shifts by country and by who is speaking. Treat it as a lead, not a rule.
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