Technical article
Penalties for Filing Late: A Trust, a Trustee, an Heir
Spain changed its rules in 2022 after a European court ruling, and firm pages give different amounts for the foreign-assets form.
Imagine a trust with US$5 million in it, set up by a parent in the United States. A trustee in another country runs it. One of the children lives in Canada. A form is due at the tax office, and it arrives a year late. What do the sources say it could cost?
It depends on the form. The same year can cost a flat sum under one rule and a share of the whole trust under another. The table sets out what the sources give.
What the sources give
| Place and filer | The form | The penalty found |
|---|---|---|
| United States, owner or heir of a foreign trust | Forms 3520 and 3520-A | The greater of US$10,000 or 35% of the amount moved or paid. For a missing 3520-A, the greater of US$10,000 or 5% of the trust assets treated as owned. Another US$10,000 for each 30 days after a 90-day notice |
| United States, a trust paying a foreign heir | Form 1042 | 5% a month up to 25% for late filing; 0.5% a month up to 25% for late payment |
| United States, foreign accounts | Form 8938 | US$10,000, then up to US$50,000 more |
| United Kingdom, trustee | Trust Registration Service | May be GBP 5,000 (about US$6,500) |
| Canada, trustee | T3 return with beneficial-owner schedule | The greater of CAD 2,500 (about US$1,800) or 5% of the highest property value, for a knowing or grossly negligent failure |
| Canada, trustee | NR4 slips and withholding | The tax plus 10%, or 20% if repeated knowingly |
| Canada, contributor to a non-resident trust | Form T1141 | CAD 2,500 a year. CAD 500 a month for knowing failures, up to CAD 12,000; then 5% of the amount transferred |
| France, administrator | Forms 2181-Trust 1 and 2 | EUR 20,000 (about US$22,000), or 12.5% of the trust if higher; sources differ |
| Brazil, resident holder | Central bank declaration | Up to BRL 250,000 (about US$45,000) |
| Italy, trust with legal effect there | Register of beneficial owners | EUR 103 to 1,032 |
The United States and United Kingdom rows are tier A. The Canadian trustee rows come from the tax agency (tier A) and a large firm (tier B), and the T1141 row from one 2020 page (tier C). Brazil is tier B and Italy tier C.
Flat or a share
The first United States row takes the greater of the two. As examples, on a US$5 million transfer 35% is US$1.75 million, far above the flat US$10,000. On a transfer of US$20,000, the flat sum is the larger. Canada's trustee rule has the same shape: the greater of CAD 2,500 or 5% of the highest property value.
France is the place where the sources disagree. A 2012 article gives EUR 10,000 or 5%. A tax office note gives EUR 20,000 or 12.5%. A 2026 firm page gives a fixed EUR 20,000 plus an 80% surcharge. France also adds a 1.5% yearly levy on trust assets that were not declared. Spain changed its rules in 2022 after a European court ruling, and firm pages give different amounts for the foreign-assets form.
Who the penalty lands on
The table names the filer in each row. In the United States the owner or heir files Form 3520, and the owner sees that the 3520-A is filed. In Canada the trustee carries the T3 and NR4 penalties, and the contributor carries the T1141 one. In France the administrator does. A trust with a trustee in one country and heirs in three can create penalties for several people at once.
You could
You could ask each filer for the next three dates and the penalty that goes with each. You could ask your trustee whether the contract says who pays if the trust is late.
Has a late form ever cost your family, or someone you know? Tell us what happened and what it took to put right. Someone with a trust in two countries may find it useful.
Figures are estimates for planning, based on public data. Date read: October 2026.
Sources
- IRS instructions for Forms 1042 and 3520, with sections 6039F, 6662 and 6677 (A)
- IRS Form 8938 pages (A), gov.uk Register a trust as a trustee (A)
- Canada Revenue Agency NR4 guide and T3 guide (A)
- Chambers Private Wealth guide on Canada trust reporting, 2024 (B)
- T1141 penalty article, 2020 (C)
- French tax office notes and 2012 to 2026 articles (A, C)
- Brazil central bank declaration notes via 2026 firm guide (B)
- Italian register of beneficial owners guide (U)
- Garrigues on Spain, 2022 (C)
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