KPMG article: Treaty-based foreign tax credit and net investment income tax
Court decisions may allow treaty-based FTC to offset NIIT for citizens abroad.
The U.S. Court of Federal Claims, a court of national jurisdiction, issued two decisions in favor of U.S. citizens living abroad by allowing a treaty-based foreign tax credit (FTC) to offset the net investment income tax (NIIT) (Bruyea, 174 Fed. Cl. 238 (2024), and Christensen, 168 Fed. Cl. 263 (2023)).
Both cases are pending appeal in the Federal Circuit. If upheld, the outcome of these cases could help alleviate the burden of double taxation on investment income for many U.S. citizens living abroad.
Read a June 2025 article* prepared by a KPMG LLP tax professionals that explores practical considerations for taxpayers while these cases are being litigated.
*This article originally appeared in The Tax Adviser and is provided with permission.