PFIC Statements FAQ
What is a PFIC?
A foreign corporation is generally considered a “passive foreign investment company” (“PFIC”) for U.S. federal income tax purposes if either at least 75% of its gross income is “passive income”, or 50% of the gross value of its assets is attributable to assets that produce, or are held for the production of, passive income. We believe Royalty Pharma plc (the “Company”) satisfies these tests and the Company should be treated as a PFIC for the current taxable year.
What is a PFIC Annual Information Statement?
The PFIC Annual Information Statement contains reporting information that would enable U.S. shareholders to make the Qualified Electing Fund (“QEF”) election. Regardless of whether a QEF election is made with respect to us, U.S. shareholders will be required to file an annual report on IRS Form 8621 containing such information with respect to its interest in a PFIC as the IRS may require. Failure to file IRS Form 8621 for each applicable taxable year may result in substantial penalties and result in the U.S. shareholder’s taxable years being open to audit by the IRS until after such forms are properly filed. U.S. shareholders should consult with their tax advisors to determine whether a QEF election should be made. A shareholder who makes a QEF election generally is required to annually include in his or her taxable income a pro rata share of the Company’s ordinary earnings and net capital gains for years in which the Company is a PFIC, whether or not we make any distributions to shareholders.
Will shareholders receive a Form 1099?
U.S. shareholders may receive a Form 1099 from banks and other financial institutions if they receive dividends or distributions from the Company during the taxable year. However, shareholders who make a QEF election should use the PFIC Annual Information Statement to determine the income includable in his or her tax return. U.S. shareholders should consult with their tax advisors to determine their taxable income.
Who can shareholders speak with for more information?
We do not provide tax advice. We strongly recommend all shareholders consult with their tax advisors to discuss the PFIC rules and the relevant tax consequences.
When are the PFIC Annual Information Statements available on the website?
The PFIC Annual Information Statement for each taxable year is expected to be posted to our website on or about March 31 of the following year.
How will investors be able to access PFIC Annual Information Statements?
The PFIC Annual Information Statement will only be posted on our website. The PFIC Annual Information Statement will not be mailed to investors.