Selling foreign mutual funds to avoid Pfic rules

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Topic Author
ebeb
Posts: 658
Joined: Sat Dec 23, 2017 1:18 pm

Selling foreign mutual funds to avoid Pfic rules

Post by ebeb »

Hello,
I decided to sell my foreign mutual funds and move them to foreign bank CDs to avoid the crazy Pfic penalties. There are some paperwork needed to transfer funds from abroad so initially keeping the money in CDs abroad until I can safely bring them to US banks. I am not sure if the tax authority will have any issues as the capital gains will be below taxable limits abroad. :annoyed
80% VOO | 20% BND+TBILL+CASH | Don't believe Nobody because Nobody knows nothin' - Anon
Topic Author
ebeb
Posts: 658
Joined: Sat Dec 23, 2017 1:18 pm

Re: Selling foreign mutual funds to avoid Pfic rules

Post by ebeb »

I learnt that Interactive Brokers in India allows investing in US ETFs using Indian Rupees. Does anyone know if investing through Interactive Brokers in US ETFs will avoid PFIC issues since the ETFs are US based funds. :confused
80% VOO | 20% BND+TBILL+CASH | Don't believe Nobody because Nobody knows nothin' - Anon
tubaleiter
Posts: 247
Joined: Tue Mar 09, 2021 11:58 am

Re: Selling foreign mutual funds to avoid Pfic rules

Post by tubaleiter »

ebeb wrote: Mon Apr 24, 2023 10:11 am I learnt that Interactive Brokers in India allows investing in US ETFs using Indian Rupees. Does anyone know if investing through Interactive Brokers in US ETFs will avoid PFIC issues since the ETFs are US based funds. :confused
IBKR will convert the rupees into USD to buy the US ETFs. And yes, US-domiciled ETFs are not PFICs, so all good if you're able to buy them.
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Hyperborea
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Location: Portugal

Re: Selling foreign mutual funds to avoid Pfic rules

Post by Hyperborea »

ebeb wrote: Mon Apr 24, 2023 10:11 am I learnt that Interactive Brokers in India allows investing in US ETFs using Indian Rupees. Does anyone know if investing through Interactive Brokers in US ETFs will avoid PFIC issues since the ETFs are US based funds. :confused
Just make sure that the US ETFs won't break financial laws where you are a resident. I have no idea about the laws of India but that can be the case in some countries.
It’s not just that facts don’t seem to matter anymore. It’s that it doesn’t seem to matter that facts don’t matter.
Topic Author
ebeb
Posts: 658
Joined: Sat Dec 23, 2017 1:18 pm

Re: Selling foreign mutual funds to avoid Pfic rules

Post by ebeb »

Being an US resident at present which may change long term, I am more worried about US laws now.
80% VOO | 20% BND+TBILL+CASH | Don't believe Nobody because Nobody knows nothin' - Anon
Topic Author
ebeb
Posts: 658
Joined: Sat Dec 23, 2017 1:18 pm

Re: Selling foreign mutual funds to avoid Pfic rules

Post by ebeb »

Will selling the mutual funds and buying individual stocks have any PFIC problems other than having to pay capital gains upon selling. Any tax issues with holding individual stocks in India long term?
80% VOO | 20% BND+TBILL+CASH | Don't believe Nobody because Nobody knows nothin' - Anon
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