A foreign corporation is a PFIC if most of its income or assets are passive, which sweeps in nearly every non-US mutual fund and exchange traded fund. The default excess distribution rules allocate gains back across the holding period, tax them at the highest historic ordinary rate and add an interest charge.
Two elections soften it. A qualified electing fund election taxes your share of income annually but requires the fund to supply US-standard statements, which many do not. A mark to market election is available for marketable stock and taxes annual appreciation as ordinary income.
Reporting is on Form 8621, generally per fund per year, which is why US persons living abroad are usually advised to avoid local funds entirely and hold US-domiciled equivalents.
General information for the United States, not tax advice. This area is complex and rules change; take professional advice for your own circumstances.
Related: section-988, irs, etf, stocks-and-shares-isa, withholding-tax-w8ben