Glossary · Entity & Business
Section 962 Election
A Section 962 election lets an individual US shareholder of a controlled foreign corporation be taxed on GILTI/Subpart F income at corporate rates, and claim a credit for foreign corporate tax — often reducing the US tax on a UK company profits.
In more detail
Individuals are not normally entitled to the corporate-level foreign tax credit on a CFC income, which can make GILTI expensive. A Section 962 election lets the individual be taxed as if a corporation for that income, accessing the lower corporate rate and a deemed-paid foreign tax credit for the UK corporation tax already paid. It often reduces or eliminates the US GILTI charge for Americans with profitable UK companies, but adds complexity and a second layer of tax on later distributions.
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