Latin America

For Dual Citizens and U.S. Residents with Latin American Ties

Dual citizens and foreign nationals living in the U.S. who own businesses or financial accounts in Latin America carry a distinct compliance burden that does not disappear when they move. FBAR, FATCA, and foreign entity reporting under Forms 5471, 8858, and 8865 apply based on ownership — not residency. We work with clients who moved to the U.S. from Latin American countries and retained holdings there, dual citizens with ongoing business interests in the region, and individuals planning immigration who want to understand and restructure their foreign positions before arrival.

Country-Specific Engagements

For clients with Mexican ties, we handle the full Mexico-specific compliance stack including U.S.-Mexico treaty analysis, AFORE reporting, and Mexican entity reporting under Forms 5471 and 8865.

Foreign Entity Reporting in Latin America

U.S. persons with ownership interests in Latin American corporations, partnerships, or disregarded entities have annual reporting obligations that go beyond FBAR and FATCA:

• Form 5471 — required for U.S. persons who are officers, directors, or shareholders of a foreign corporation above certain ownership thresholds. Applies to SA de CV, SA, SAS, Ltda, and similar corporate structures common across Latin America.
• Form 8865 — required for U.S. persons with interests in foreign partnerships. Applies to S de RL de CV structures in Mexico and comparable partnership-form entities elsewhere in the region.
• Form 8858 — required for foreign disregarded entities — foreign single-member LLCs or branch operations owned by a U.S. person not treated as a corporation for U.S. tax purposes.
• GILTI and Subpart F — U.S. shareholders of controlled foreign corporations (CFCs) may have current income inclusions even if the company makes no distribution. The passive income deferral that works under Latin American law often does not work once the owner becomes a U.S. person.
• Penalties for non-filing are $10,000 per form per year, with additional penalties for continued failure and potential reduction of foreign tax credits.

What U.S. Residents with Latin American Holdings Typically Need

Common compliance needs include:

• Form 5471 for ownership in Latin American corporations
• Form 8865 for interests in Latin American partnerships
• Form 8858 for foreign disregarded entities or branch operations
• FBAR (FinCEN 114) for foreign bank accounts over $10,000
• FATCA (Form 8938) for foreign financial assets above threshold
• Subpart F and GILTI analysis for controlled foreign corporations
• Treaty analysis where a U.S. tax treaty exists with the relevant country
• Pre-immigration restructuring review before becoming a U.S. tax resident

Treaty Coverage in Latin America

The U.S. has a limited number of full tax treaties in Latin America. Mexico has one of the most comprehensive. Most other Latin American countries do not have a full income tax treaty with the U.S., which means clients cannot rely on treaty provisions to reduce withholding on cross-border payments or resolve residency conflicts. In the absence of a treaty, the foreign tax credit remains the primary mechanism for avoiding double taxation on income sourced from those countries. We track the treaty status of each country and apply the correct framework based on where income originates and where the client holds assets.

Pre-Immigration Planning for Latin American Nationals

Individuals and families moving from Latin America to the U.S. need to address their foreign holdings before they arrive. Once a person becomes a U.S. tax resident — through a green card, visa status, or the substantial presence test — their worldwide income and foreign assets become reportable. Key steps before the move:

• Entity review — foreign corporations, partnerships, and disregarded entities need to be classified correctly under U.S. tax rules before the owner becomes a U.S. person. Some structures trigger immediate Subpart F or GILTI inclusions upon arrival. Restructuring, liquidating, or reorganizing before the move can eliminate ongoing complexity.
• Asset basis documentation — establishing the fair market value of foreign assets before arrival sets the correct U.S. cost basis going forward.
• PFIC exposure — foreign mutual funds and certain investment vehicles are classified as Passive Foreign Investment Companies under U.S. law. PFIC status triggers complex annual reporting and punitive tax treatment on distributions and gains. Liquidating these before becoming a U.S. person avoids the problem.
• Bank account inventory — FBAR and FATCA thresholds apply from the first year of U.S. residency. Identifying all accounts and their balances before arrival avoids scrambling after the fact.

Who This Is For

This page fits dual citizens living in the U.S., foreign nationals who moved to the U.S. and retained business interests or financial accounts in Latin America, and individuals planning immigration from Latin American countries who want to understand the full compliance picture before arrival. It also covers those behind on foreign entity reporting — Forms 5471, 8865, or 8858 — who need to address prior-year non-compliance.