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Liechtenstein reporting and U.S. trust forms

Liechtenstein's published FATCA information and trustee supervision sit alongside IRS reporting rules relevant to U.S. citizens who own or benefit from foreign trusts.

Liechtenstein's FATCA framework

Liechtenstein's FATCA intergovernmental agreement is a Model 1 agreement and is in force. FATCA requires foreign financial institutions to report account information to the IRS when accounts are held by U.S. taxpayers or certain foreign entities with substantial U.S. ownership.[2]

Foreign financial institutions may register directly with the IRS under FATCA regulations, or comply with intergovernmental agreements treated as effective in their jurisdictions.[2]

Trustee supervision and registers

Liechtenstein's Financial Market Authority supervises trustees and trust companies for due diligence. Its stated responsibilities include licensing work, checking compliance with licensing conditions, conducting inspections, and maintaining a register of licence holders.[1]

U.S. person status and foreign trust reporting

The IRS definition of a U.S. person includes a U.S. citizen. IRS reporting rules can apply when a U.S. person transacts with a foreign trust, is treated as its owner under grantor trust rules, or receives distributions.[4]

Form 3520 is the annual return for transactions with foreign trusts and receipt of certain foreign gifts. The IRS says filing generally applies when a U.S. person creates or funds a foreign trust, receives a distribution, receives uncompensated use of trust property or a trust loan, or is treated as the trust's U.S. owner.[4]

A U.S. owner under the grantor trust rules is generally taxed on trust income. The IRS describes a Foreign Grantor Trust Owner Statement that carries information about trust income for the owner's U.S. income tax return.[4]

Form 3520-A is the annual information return for a foreign trust with a U.S. owner. The IRS assigns responsibility to the U.S. owner to ensure the trust timely files a complete and accurate return and provides required statements to U.S. owners and beneficiaries.[4]

If the foreign trust does not file Form 3520-A, the IRS describes a substitute filing. The U.S. owner completes the substitute to the best of the owner's ability and attaches it to a timely filed Form 3520, including extensions.[4]

Additional U.S. asset and account reporting

The IRS says a U.S. beneficiary receiving a distribution from a foreign nongrantor trust generally reports the beneficiary's share of distributable net income. The beneficiary statement depends on whether the trust is a grantor or nongrantor trust, and the Form 3520 instructions address distribution reporting when no statement arrives.[4]

Form 8938 may apply when the total value of specified foreign financial assets in which the person has an interest exceeds applicable reporting thresholds. The IRS separately identifies FBAR reporting where a person has a financial interest in or signature authority over a foreign financial account, including a trust account.[4]

An exception from Forms 3520 and 3520-A does not remove any applicable Form 8938 or FBAR obligation, according to the IRS overview.[4]

Questions and answers

Does the FMA maintain a trust register?

The FMA register lists licensed trustees and trust companies.[1]

When can Form 3520 relate to a U.S. citizen and a foreign trust?

The IRS describes filing in cases such as creating or funding a foreign trust, receiving a distribution or qualifying as its U.S. owner. The form also covers certain foreign gifts.[4]

Who files Form 3520-A for a foreign trust with a U.S. owner?

The foreign trust files the annual return, while the IRS says the U.S. owner must ensure that a complete and accurate return is filed. If the trust does not file, the owner files a substitute with Form 3520.[4]

When can Form 8938 or FBAR relate to a foreign trust?

Form 8938 may apply if specified foreign financial assets exceed the relevant reporting threshold. FBAR may apply when a person has a financial interest in or signature authority over a foreign financial account, including a trust account.[4]

Related glossary terms

  • U.S. owner of a foreign trust: The Form 3520 instructions define a U.S. owner as a person treated as owning trust assets under grantor trust rules. Ownership can apply to part of a trust.
  • FATCA: FATCA requires certain U.S. taxpayers to report foreign assets and financial institutions to report accounts to the IRS. Form 8938 may apply at thresholds.
  • U.S. beneficiary of a foreign trust: U.S. beneficiary status in a foreign trust affects how distributions from the trust are reported on Form 3520.

Related articles and guides

Tools and official documents

Sources and data notes
  1. Financial Market Authority Liechtenstein, Trustees and trust companies. https://www.fma-li.li/en/financial-intermediaries/other-financial-intermediaries-division/trustees-and-trust-companies. Retrieved .
  2. U.S. Department of the Treasury, Foreign Account Tax Compliance Act: agreements and understandings by jurisdiction. https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act. Retrieved .
  3. Internal Revenue Service, United States income tax treaties, A to Z. https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z. Retrieved .
  4. Internal Revenue Service, Foreign trust reporting requirements and tax consequences. https://www.irs.gov/businesses/international-businesses/foreign-trust-reporting-requirements-and-tax-consequences. Retrieved .
  5. Internal Revenue Service, Instructions for Form 3520. https://www.irs.gov/instructions/i3520. Retrieved .

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