Notes on the US taxation of foreign institutional investors in US funds: pension funds, sovereign investors, funds of funds and family offices.
Written by Francis J. Helverson, US international tax attorney, for the people who make the subscription decisions. Published on LinkedIn since 2022 and collected here, each with the original slides.
Articles
-
Management Fee Offsets – A Trap for Foreign Investors?
When a private equity fund pays out unused management fee offsets at wind-down, a foreign investor can acquire U.S. income, withholding and even a U.S. tax return filing obligation it never wanted. How the payment can be characterised, who should take the money, who should waive, and when the election has to be made.
-
When “No U.S. Real Estate” Can Still Trigger FIRPTA
A foreign investor subscribes to a U.S. private equity fund that promises no real estate and no ECI. Four years later a portfolio company is found to be a U.S. real property holding corporation, and the investor has a U.S. tax return. How it happens, why the five-year lookback bites at exit, and the feeder structure and side-letter terms that prevent it.
-
Final Qualified Foreign Pension Fund (QFPF) Regulations
A walk through the final QFPF regulations released on 28 December 2022: the statutory definition, qualified holders and qualified controlled entities, the new testing period, qualified segregated accounts, the 85% / 5% benefit tests, ancillary benefits, valuation and recordkeeping, the 5% relief for non-employee recipients, and the withholding rules for foreign partnerships and documentation.
-
Final QFPF Regulations? We’re Still Waiting
Six months before the final QFPF regulations arrived: why they were late, what the German pension fund industry asked Treasury to change in the 2019 proposed regulations, and the trifecta of classifications a foreign pension fund has to get comfortable with before investing in the US.
-
March 2022 Biden Tax Proposals – Impact on Foreign Pension Funds
What the Biden administration's March 2022 proposals would have meant for foreign pension funds with US-source income: higher ECI rates for complex trusts, a 28% corporate rate, and why a leveraged US blocker could have held the effective rate near 20%. With worked examples for a direct real estate fund investment and an investment through a blocker.
About the author
Francis (Jay) Helverson is a US international tax attorney in the New York City area with more than 25 years of cross-border practice. He advises European and other foreign institutional investors, funds and corporate groups on the US tax side of their investments and operations, from due diligence through structuring, documentation, exit and M&A transactions.
He was a Managing Director (Partner) with a global advisory firm, where he led the New Jersey office from 2018 through 2021, and before that the lead Managing Partner of WTS US and a founding member of the Board of Directors of WTS Global. He holds an LL.M. in Taxation from New York University School of Law and a J.D. with honors from Rutgers University School of Law, and is admitted in New York and New Jersey. He is fluent in German.
