FIRPTA Reforms Enacted
מאת: Jeremy D. Tunis>
נשלח: Tuesday, 22 December 2015 20:41
נושא: FIRPTA Reforms Enacted
We are very happy to report that on December 18, 2015, President Obama signed The
Protecting Americans from Tax Hikes Act of 2015 (‘The Act”). In addition to
extending a number of tax relief provisions due to expire at the end of the year, the
Act incorporates the two main FIRPTA reform provisions that our coalition has
advocated for over the past several years.
First, The Act completely exempts “qualified foreign pension funds” and entities
wholly owned by such funds from FIRPTA taxation, equalizing the tax treatment of
domestic and foreign pension funds on the disposition of U.S. real property interests.
A foreign pension fund is “qualified” if it is subject to government regulation and
certain reporting requirements in its jurisdiction, is established to provide retirement
or pension benefits to participants or beneficiaries that are current or former
employees, has no greater than 5% beneficiaries, and enjoys tax benefits on either
contributions or investment income in its home jurisdiction. The new exemption
applies to direct investments or investments through partnerships and private equity
Second, the Act expands the FIRPTA exemption available to small foreign “portfolio
investors.” Under prior law, foreign investors owning 5% or less of a publicly traded
REIT were not subject to FIRPTA taxation upon a sale of the REIT’s stock or the
receipt of a capital gain dividend from the REIT. The Act increases this ownership
threshold from 5 to 10% bringing the FIRPTA regime in line with the definition of a
portfolio investor used in most U.S. tax treaties. The Act provides for the first time
that the exemption for small foreign portfolio investors applies to interests in REITs
held by certain widely held, publicly traded “qualified collective investment
vehicles”, including property trusts and foreign publicly traded partnerships that
qualify under a comprehensive income tax treaty with the United States.
The passing of these important reforms could not have been possible without your
tremendous efforts and support. A great thanks also to all members who traveled to
Washington for Congressional meetings. Our success was also due to your financial
support allowing the Coalition to highlight the issues through Congressional press
conferences and political outreach.
We are also pleased to report that a number of our Congressional supporters
and key leaders have expressed a desire to continue the effort to make greater
reforms to FIRPTA through possible tax reform and other avenues next year.
We will plan to schedule a coalition call the first week of January to discuss these
matters in more detail but first wanted to thank all coalition members for their
tremendous efforts over the past couple of years. In the meantime, Happy Holidays to
Richard & Jeremy
Jeremy D. Tunis, Esq.
Vice President, Outreach
Invest In America Coalition