US Tax Filings for a Finnish Asunto-osakeyhtiö (AOY)

Today I was asked what the US tax filing obligations are if you own an AOY in Finland. Let’s go step by step and figure it out.

Step 1: Is the AOY Considered a Foreign Corporation?

Since an AOY is a housing company (real estate holding entity) formed under Finnish law, it is likely treated as a foreign corporation under U.S. tax rules. This means Form 5471 may be required if you meet certain ownership thresholds.

Step 2: What Percentage of AOY Do You Own?

• Less than 10% → Likely no Form 5471 required.

• 10% or more → You likely fall into one of the filer categories.

• More than 50% (alone or with other U.S. persons) → The AOY is considered a Controlled Foreign Corporation (CFC), and stricter reporting rules apply.

Step 3: Which Filer Category Applies to You?

Check which of these apply to your situation:

Category Ownership / Involvement 5471 Filing Required?

Category 2 You became an officer or director of the AOY AND a U.S. person acquired 10%+ of the stock ✅ Yes

Category 3 You acquired or sold 10% or more of the AOY stock ✅ Yes

Category 4 The AOY is a Controlled Foreign Corporation (CFC) (U.S. shareholders own 50%+) ✅ Yes

Category 5 The AOY is a CFC AND you are subject to GILTI tax ✅ Yes

If you own 10% or more, Form 5471 is likely required. If the AOY is a CFC (50%+ U.S. ownership), you must file even if you don’t receive income from it.

Step 4: Does the AOY Generate Passive Income?

If the AOY mainly earns passive income (such as rental income from units it owns), it might also be a Passive Foreign Investment Company (PFIC).

• If the AOY is a PFIC, Form 8621 (in addition to Form 5471) might be required.

• The PFIC rules can trigger higher U.S. taxes on any profits.

Step 5: Are There Any Other Reporting Requirements?

• If the AOY has a bank account with over $10,000, you may need to file FBAR (FinCEN Form 114).

• If the AOY generates income that is taxed in Finland, you might qualify for a foreign tax credit (Form 1116).

Conclusion: Do You Need to File Form 5471?

• If you own less than 10% → No 5471 required.

• If you own 10% or more → 5471 likely required under Categories 2, 3, or 4.

• If the AOY is a CFC (50%+ U.S. ownership) → 5471 required (Category 4 or 5), and GILTI tax may apply.