25% foreign ownership

Also known as: 25-percent foreign shareholder, 25% foreign shareholder threshold

process

The threshold that triggers Form 5472 reporting for a US corporation (or a disregarded entity treated as one): a foreign person holding, directly or by attribution, 25% or more of the entity by vote or value.

Direct vs. constructive ownership

Direct ownership is simple: the foreign person is on the cap table at 25%+. Constructive ownership adds attribution rules — ownership held through family members, trusts, and controlled entities counts against the threshold. See 26 CFR §1.6038A-1(e) for the full attribution rules.

100% is the common case

For a single-member LLC owned by one non-US founder, ownership is 100% — well above the 25% threshold. The threshold only becomes interesting when a cap table is mixed US/foreign.

What counts as “foreign”

For Form 5472 purposes, a “foreign person” includes non-US citizens, non-US tax residents, and foreign corporations/partnerships/trusts/estates. US green-card holders and long-term US residents are not foreign for this purpose.

25% foreign ownership

Full entry

Direct vs. constructive ownership

100% is the common case

What counts as “foreign”

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