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Investing With a US Passport
A portfolio in Israel that avoids the PFIC trap
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Learn
Why the obvious Israeli products are the wrong ones for you
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The PFIC problem
Why an ordinary Israeli fund becomes a punitive US tax object the moment a US citizen holds it.
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Index funds and ETFs here
How Israeli index products are structured and where they are domiciled.
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Your brokerage options
Israeli brokers, bank desks and foreign platforms, and who can use which.
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Which account to fill first
The order to use Israeli tax-advantaged accounts, and where PFIC changes it.
Assess
What the exposure costs you
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Price the PFIC drag
What the punitive treatment takes out of a holding over time.
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Estimate Israeli capital gains
What Israel takes on a disposal, including the inflation adjustment.
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Take a net-worth snapshot
Everything you hold in both countries, in one currency.
Compare
The two routes open to you
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A US-domiciled account
Holding US-domiciled funds from Israel, and what it takes to keep one open.
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Investing through your Israeli bank
What the bank desk offers, what it charges, and where PFIC bites.
Act
Reporting, on both sides
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Report a foreign brokerage to Israel
Israel does not withhold on a foreign account, so the reporting is yours.
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Put the US filings in your calendar
FBAR, FATCA and Form 8938 dates, and which of your accounts count.
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Choose a kupat gemel carefully
Fees and tracks, and the PFIC catch that decides it for US citizens.
Before you buy anything pooled, have one conversation with an accountant who files both Israeli and US returns. Ask specifically whether each holding you are considering is a PFIC, and get the answer in writing. An adviser who only files one side can recommend a product that is entirely sensible in that jurisdiction and expensive in the other.