As an US resident alien that plans to move abroad in a few years, I was interested in Accumulating Irish-domiciled ETFs (for reduced withholding taxes on dividends, to avoid high income tax on the distributed dividends and also to avoid the low exemption for US estate tax).
The potential problem with this approach is regarding taxes for PFICs while being a US resident.
However, while trying to better understand the taxation for PFICs, I came to the understanding that, given no election is made (mark-to-market or QEF), then there would only be tax when there are distributions (more specifically, excess distributions). And given the accumulating ETF does not distribute dividends, then there would be no tax.
Source: https://www.mondaq.com/canada/Tax/63442 ... s-And-ETFsIn the absence of an election, the owner of a PFIC will be taxed under Section 1291 on the amount that the yearly distribution exceeds 125 per cent of the average of the last three years of distributions, and also on any capital gains realized on the sale of any fund units.
Source: https://ca.rbcwealthmanagement.com/docu ... 1715cb7ee1The excess distribution regime permits a deferral of U.S. tax until earnings are distributed or the PFIC is sold.
Is that a misunderstanding on my part? Has anyone had experience with PFIC taxation and foreign accumulating ETFs?
Any thoughts would be greatly appreciated!