PFIC Annual Information
Summary for Investors
Zealand Pharma has been classified as a passive foreign investment company (PFIC). We are providing PFIC Annual Information Statements. These statements are made available by late March, and may be used by U.S. persons to help report their PFIC investments if they make the QEF election.
What is a PFIC?
- A Passive Foreign Investment Company (PFIC) for U.S. tax purposes is a foreign corporation with predominantly passive income or assets. It is defined under U.S. tax law as any foreign corporation where 75% or more of its gross income is passive, or 50% or more of its assets produce (or are held for the production of) passive income. For U.S. tax purposes, passive income includes items such as dividends, interest, rents, royalties, annuities, certain stock gains and certain foreign currency gains that are not directly related to a business.
Consequences of Investment in a PFIC:
- The rules relating to PFICs are complex and Investors should consult their own tax advisors.
- In general, U.S. tax resident investors who do not make any of the elections described below may be taxed at the highest applicable ordinary income rates, and be subject to an interest charge, with respect to above-average distribution amounts from the PFIC as well as regarding gains on disposals of PFIC stock.
- Investors who own an interest in a PFIC are generally expected to file Form 8621, “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund,” with their annual tax return.
Available Elections for Alternative Tax Rules:
- Qualified Electing Fund (QEF) Election: Allows investors to include their share of the PFIC's ordinary income and capital gains in their taxable income annually and preserves capital gain treatment on the sale of shares.
- Mark-to-Market Election: Permits investors to recognize gains and losses annually based on the market value of PFIC shares, providing another alternative method to manage tax implications of the PFIC. This election is only available for an investment in a PFIC that is a publicly traded corporation.
What is a PFIC Annual Information Statement?
- The PFIC Annual Information Statement provides the necessary information for U.S. investors to report their share of the PFIC's income and distributions on their tax returns for those who elect to treat the PFIC as a QEF.
- The statement contains the investor’s pro-rata share of the PFIC’s ordinary earnings and net capital gain for the tax year (shown as average per day amounts) for entities that might be classified as a PFIC for U.S. tax purposes.
PFIC Annual Statements:
- For further details, please refer to the PFIC Annual Information statements that may be downloaded below.
