UAE International Pension Fund Reporting for FBAR
One of the key benefits of working in the UAE, is that there is no income tax on personal income. Therefore, non-US taxpayers who reside in work in the United Arab Emirates, may be able to avoid nearly all taxes on their personal income depending on the particular residence requirements of their country and the UAE, respectively — but US Persons would still be subject to IRS taxes. It is also common for taxpayers residing in the UAE who are not citizens of the UAE to have a personal provident fund or another international pension plan, such as Metlife. A common question for US taxpayers residing in the UAE who have left the UAE — and still have a UAE pension fund — is whether or not it qualifies for having to be reported on the annual FBAR. Let’s take a look at the UAE Pension FBAR reporting rules.
UAE Pension Funds
The pension rules in the UAE are complex. Local residents usually have a public pension, and temporary residents in the UAE may receive an “end of service gratuity” (for expatriates working in the private or government sector). These types of pensions are reportable for FBAR — as are other types of international pension plans held by UAE and former UAE residents who are US Persons.
UAE Provident Fund is FBAR Reportable
The FBAR refers to foreign bank and financial account reporting a.k.a. FinCEN Form 114. Technically, the FBAR is not even a tax form — but since 2003 the Internal Revenue Service has been tasked with compliance and assessment/enforcement of FBAR penalties. The Internal Revenue Service is known to issue foreign account penalties for the failure to report for retirement accounts on the FBAR – so it is something to be cognizant of, but even if you missed it in prior years, you can usually resolve the issue without much headache. Part of the confusion in reporting foreign retirement plans on the FBAR was due to a prior version of the FBAR reference guide, in which there was some ambiguity as to whether foreign retirement plans are reportable. They are, but the distinction is that if you have a US retirement plan such as a 401(k) and within it, you hold foreign investment accounts or pooled funds (foreign ETF or mutual funds), you do not need to file the FBAR in that situation, for those funds/accounts.
FBAR Lawyers & International Tax Law Specialist Team
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