Although private credit is an established global asset class with strong annual growth, U.S. fund managers must still tread carefully before onboarding non‑U.S. investors. An improperly structured private credit fund can expose non‑U.S. investors to taxes from income effectively connected (ECI) to a trade or business (e.g., loan origination) in the U.S., along with resulting U.S. tax filing obligations. It is hardly a straightforward problem, however, as sponsors must weigh several factors when deciding how to operate their private credit strategy to both optimize gains and limit tax exposure. Those issues were addressed in a program hosted by Strafford CLE Webinars, featuring Proskauer partners Christine Harlow and Janicelynn Asamoto Park, that analyzed tax risks for non‑U.S. investors in U.S. private credit funds. This first article in a two-part series describes the ECI risks faced by non‑U.S. investors and the challenges with conducting a private credit strategy without operating as a trade or business in the U.S. The second article will discuss the challenges of using hybrid funds for private credit strategies and detail several fund structures that can mitigate potential tax harm. See our two-part series: “Notable Tax Provisions and Circumstances to Weigh to Optimize Treatment of Non‑U.S. and Tax Sensitive Investors” (Jun. 28, 2022); and “Ways That Tax Concerns Drive Structuring Strategies for PE, Real Estate and Private Credit Funds” (Jul. 12, 2022).