The principle: you pay tax where you live
A single-member LLC owned by a non-resident is generally not taxed at the US federal level, as long as it has no taxable activity in the US. That does not mean its profits are taxed nowhere: if you are a French tax resident, they are in principle taxable in France.
The France–United States tax treaty
France and the United States are bound by a tax treaty signed on 31 August 1994 and amended in 2004 and 2009. It allocates taxing rights between the two countries and has specific rules for transparent entities such as LLCs: their income is attributed to their members.
How France looks at your LLC
The French tax authorities compare the LLC with French companies to decide how to treat it. Depending on its features, its profits may be taxed directly in your hands, as business income. Which form to use and which income category applies depend on your situation: this is the first point to have confirmed.
The risk of effective management in France
If the company is actually run from France, the authorities may consider that its place of effective management or a permanent establishment is in France, and subject it to French corporate tax. An LLC is not a way to avoid French tax: it is a tool to run a business aimed at the US or international markets.
Reporting the LLC's bank account
People domiciled in France must report every year the accounts they opened, held, used or closed abroad, with form 3916 attached to their income tax return. The fine is €1,500 per unreported account. This may cover your LLC's account if you can use it: check with your advisor.
Our advice
Before forming your LLC, have your situation reviewed by a chartered accountant or a tax lawyer in France. ClicGlow handles the US side (formation, EIN, federal obligations) and helps you gather the documents your advisor will need.
Official sources
This article is for information only and is not legal or tax advice. The rules mentioned may have changed since the update date.
