US LLC and French Tax Residence: When the Fisc Requalifies Your Company

You formed the LLC in Delaware or Wyoming, the IRS treats it as a disregarded entity, and the profit already lands on your Schedule C. Then you moved to Lyon, and the US LLC France tax question stopped being academic. France does not read your check-the-box election. It reads the operating agreement, decides which French company your LLC most closely resembles, and taxes it on that basis. Running a US LLC from France can convert a pass-through into a French corporate taxpayer without one line changing in Delaware. This article is for informational purposes only and is not tax or legal advice; consult a qualified cross-border tax professional before making any filing decision.

Your LLC Is a Pass-Through in Delaware and a Corporation in France

On 12 November 2025 the Conseil d'Etat held that a California LLC was assimilable to a French SAS, and therefore liable to French corporate income tax by reason of its legal form alone (decision no. 502894). The member had done nothing unusual. The company simply had the characteristics French law associates with a capital company, and that was enough.

This is the gap most American owners never see coming. In the United States the LLC is a wrapper: the tax result depends on an election you made on Form 8832 or by default. In France the tax result depends on what the entity is, not on what any tax authority has agreed to call it.

What the assimilation method actually looks at

The method dates to the Artemis decision of 24 November 2014 (no. 363556), where the Conseil d'Etat set out that the tax judge must identify, from all the characteristics of the foreign company and the law governing its formation and operation, which type of French company it resembles. The foreign tax classification is set aside deliberately. What the judge weighs instead is closer to company law than to tax law:

• whether members are liable beyond their contributions

• whether the death or withdrawal of a member ends the company

• how freely the operating agreement can be written, and what the members actually wrote in it

• how membership interests transfer, and who has to consent

The 2025 decision settled a point that had produced contradictory appeal rulings for a decade. The Marseille court had treated limited liability as one factor among several and concluded the LLC looked like a partnership. The Conseil d'Etat quashed that reasoning: limited liability is the line that separates capital companies from partnerships in French law, so it cannot be demoted to a detail. That single sentence moves most operating LLCs into the corporate column, because limited liability is the reason people form an LLC in the first place.

Why your check-the-box election carries no weight here

A single-member LLC is invisible to the IRS, which treats the member as earning the income directly. France reaches the opposite conclusion from the same facts, and there is no rule of mutual recognition that forces the two systems to agree. The practical consequence is a structure that is one taxpayer in Washington and two taxpayers in Paris: the company, and you. Neither government is obliged to fix that for you.

The Four Positions the Fisc Can Take on Your LLC

French tax offices do not have a single LLC rule they apply mechanically. They have four legal routes, and which one they use changes what you owe and who owes it.

The four are not alternatives you get to choose between. An inspector picks the one that fits the file, and the same LLC can shift categories across years if the operating agreement is amended or the business changes shape. What they share is that none of them leaves the profit untaxed in France while you live there.

Where Your Place of Effective Management Sits Once You Move

Article 5 of the France United States tax treaty lists a place of management as an example of a permanent establishment, alongside a branch, an office and a factory (1994 convention, article 5(2)). French doctrine defines the siege de direction effective as the place where the strategic management decisions needed to run the business are taken. For a one person consultancy, those decisions are taken wherever that person opens the laptop.

Under article 209 I of the French tax code, corporate tax reaches the profits made in businesses operated in France and those whose taxation is attributed to France by a double tax treaty (BOFiP, BOI-IS-CHAMP-60-10-30). The words place of effective management do not appear in that article: the bridge is the treaty, which counts a place of management in France as a permanent establishment. A Delaware registered agent address is a mail-forwarding contract, not a management function, and it has never persuaded a French inspector on its own.

The treaty tiebreaker that does not break the tie

Where a company is resident in both states, article 4(4) of the treaty does not pick a winner. It sends the case to the two tax administrations to settle by mutual agreement, weighing place of effective management and place of incorporation. If they reach no agreement, the entity is treated as resident of neither state for treaty purposes, which means it loses the protection it was relying on. Competent authority procedures take years and are not a realistic route for a business turning over 150,000 dollars.

Why a US citizen in France may have no treaty resident to point to

Article 4(2)(a) of the treaty says France will treat a US citizen as a US resident only if that person has a substantial presence in the United States, or would be a resident of the United States and not of a third state under the tie-breaker principles in paragraph 3. An American who has moved to France permanently often meets neither limb. Article 4(2)(b)(iv) then treats a pass-through entity as a resident only to the extent its income is taxed in that state as the income of a resident. Read together, the disregarded LLC of a US citizen living full time in France may have no US treaty residence at all from the French side, which removes the article 7 business profits shield before the argument about permanent establishments even starts. This is fact specific and worth a written opinion rather than an assumption.

Article 155 A, the Shortcut for When You Are the Business

Article 155 A of the French tax code lets the administration tax sums received by a person established outside France, in the name of the person in France who actually performed the services, when one of three conditions is met (BOFiP, BOI-IR-DOMIC-30). The conditions are control of the foreign recipient, failure to show the recipient mainly carries on an industrial or commercial activity other than providing services, or the recipient sitting in a privileged tax regime.

A solo consultant who owns 100% of a Delaware LLC, performs every hour of the work from an apartment in France, and has the LLC issue the invoices meets the first condition on the face of it. The administration carries the burden of proving that you control the foreign recipient, but the burden flips on substance: article 155 A applies unless you establish that the LLC predominantly carries on an industrial or commercial activity other than supplying your services, and, where you do control it, that its invoices have a real counterpart in work of its own (BOFiP, BOI-IR-DOMIC-30). Substance means staff, premises and functions that are not you. A registered agent, a Stripe account and a mailbox are not substance.

Article 155 A lets an inspector skip the qualification debate entirely. There is no need to decide whether the LLC is a SAS or a partnership if the fee is simply taxed as your income.

What It Costs If You Never Registered Anything

The 80% surcharge for an undeclared activity

The exposure is not the tax. It is the surcharge and the length of the window. An activity is treated as occulte when the taxpayer neither declared it to a business formalities centre or the commercial court registry nor filed the returns due, and that triggers an 80% surcharge under CGI article 1728, 1, c (BOFiP, BOI-CF-INF-10-20-10). No formal notice is required first. The Conseil d'Etat held on 7 December 2015 (no. 368227) that the administration does not have to prove any intention to conceal, but the presumption it relies on can be rebutted: the taxpayer defeats it by establishing that he made an error justifying why he filed nothing at all, and where he has met every tax obligation in another country that error is weighed against the level of tax paid there and the exchange of information arrangements between the two administrations (Conseil d'Etat, decision no. 368227).

Ten open years instead of three

Two multipliers sit on top. Article L169 of the tax procedures book extends the reassessment window from three years to the end of the tenth year following the year of assessment, so a 2019 result is still open until 31 December 2029. And late interest runs at 0.20% per month, 2.40% a year, from the month after the tax was due (CGI article 1727). Where the file is one of undeclared activity, the count stops at the end of the month of the proposed adjustment or of the month you file the missing return, not at payment. On ten open years the interest alone compounds into real money before the surcharge is added.

Run the arithmetic on a business clearing 90,000 euros of profit a year. Ten years of corporate tax at 25% is 225,000 euros of principal. Add the 80% surcharge and the interest and the total lands closer to 450,000 euros than to the 225,000 the owner might have budgeted for. That figure is what makes this a problem worth solving in the month you notice it rather than the year you are asked about it.

The window closes in one direction only. Every month an undeclared LLC keeps invoicing adds another month of interest to nine other open years at the same time. If you are trying to work out whether your structure is exposed and what a voluntary regularisation would realistically cost, a 30 minute consulting call gets you a written plan within 48 hours instead of another quarter of guessing.

Where Americans Running a US LLC From France Get Stuck

The pattern is consistent enough that cross-border accountants describe the same four conversations.

Structure mistakes that make the file worse

The registered agent is treated as an address. Owners assume the Delaware or Wyoming agent gives the company a place of business. It gives it a service of process address. French inspectors ask a different question: where were the decisions taken, where are the clients contacted from, where does the work happen. Every honest answer points at the French apartment.

Paying yourself nothing looks worse, not better. A common instinct is to leave the profit inside the LLC and draw only what is needed. Under French analysis this makes two things worse at once. If the LLC is opaque, the retained profit is still taxable at the entity level. If article 123 bis applies, the accumulated cash is precisely what makes the entity a mainly financial one and brings the retained profit into your personal income anyway.

How the activity actually gets found

The two tax systems tax on different calendars. The US return for a disregarded LLC is due on 15 April, though an American living in France gets an automatic two month extension to 15 June by attaching a statement to the return, with interest still running on anything unpaid from 15 April (IRS, automatic 2 month extension). The French corporate return for a December year end falls in the second half of May of the following year, and the foreign tax credit rarely lines up cleanly across the two. Owners who file both returns themselves usually discover the mismatch a year after they could have planned around it, which is the point at which the foreign tax credit on Form 1116 becomes an exercise in damage limitation.

The activity surfaces through the bank, not through the tax return. French banks report account holders under FATCA and the common reporting standard, and a French professional bank account, a French VAT number requested for one invoice, or a professional address printed on a contract are all ordinary routes by which an undeclared activity becomes visible. Owners tend to assume discovery would come from an audit. In practice it more often comes from a routine data match.

Filing It Properly From Here

Registering with the right French tax office

Registration of a foreign company with French obligations goes through the single business formalities window at formalites.entreprises.gouv.fr, which issues the SIREN and SIRET numbers. Where the LLC has a permanent establishment in France, the competent office is the business tax office covering the location of that establishment; where it has none, the file sits with the Service des impots des entreprises etrangeres at Noisy-le-Grand (impots.gouv.fr, corporate tax for foreign companies). Getting this wrong sends the return to the wrong service and produces a silence that reads, months later, as non-filing.

The 2065 return, the rate and the local taxes

From there the obligations are ordinary French company obligations. The corporate return is the 2065 with its supporting liasse fiscale, filed electronically; for a year ending 31 December it falls in the second half of May of the following year. Corporate tax is 25%, with the 15% reduced rate on the first 42,500 euros available only where the article 219 conditions on turnover, paid up capital and individual ownership are met, and an LLC does not automatically satisfy them. CFE, the local business tax, generally follows registration. VAT depends on where your clients are established and needs its own analysis rather than an assumption.

Social contributions and the US side of the same file

The social security layer sits separately from all of this. Someone working through their own company from France is normally carrying on a professional activity in France for social contribution purposes, which points at the French self-employed regime and at URSSAF, unless a certificate of coverage under the France United States totalization agreement says otherwise. The rules on self-employment contributions for Americans freelancing in France cover how that interacts with US self-employment tax.

Very few people can run both sides of this file alone, because it needs a French liasse fiscale and a US 1040 to be built from the same set of numbers in the same year. Expand CPA is a Paris firm that does both: its founder Benjamin Pik is a French expert-comptable and statutory auditor as well as a US CPA, and the practice covers US returns including 1040, FBAR and FATCA reporting alongside French income tax, corporate tax and VAT filings. They also handle representation during a French tax audit, which matters if a proposition de rectification has already landed. They are a partner we work with and EasyFranceNow earns nothing from the introduction.

When the LLC is no longer worth keeping

If that analysis says the LLC no longer serves a purpose, the alternatives are French. A SARL or SAS registered in France puts the structure where the activity already is, and for smaller turnover the micro-entrepreneur regime removes the entity question entirely. Closing the LLC does not erase the open years, but it stops new ones from opening.

Who Can Sort This Out Alone, and Who Cannot

The first move is to read your own operating agreement against the four factors the Conseil d'Etat weighed in November 2025, and write down honestly where the management decisions have been taken since the day you became a French resident.

If your LLC has been dormant, or you formed it after moving and have filed nothing yet, you can handle the registration and the first French tax return yourself with an accountant reviewing it once. That is a real answer, not a hedge. If the LLC has been invoicing for two years or more while you have lived in France and nothing has been declared here, the question is no longer which forms to file. It is how to sequence a voluntary regularisation so the 80% surcharge is argued down rather than assessed, and that sequencing decision is made before the first filing, not after.

If you are at that second point, book a consulting call: 30 minutes with Maxime for 199 dollars, and a written plan in 48 hours setting out which years are exposed, what to disclose first, and who needs to be on the file before you contact the fisc.

FAQ

Does dissolving my LLC clear the years I did not declare?

No. Dissolution stops future years from opening but leaves past ones intact. Where the activity was never declared to a business formalities centre, article L169 of the tax procedures book keeps the reassessment window open until 31 December of the tenth year following each year concerned, whether or not the company still exists. That ten year window is not automatic, though. It rests on a presumption of undeclared activity, and the Conseil d'Etat has applied to the reassessment delay itself, not only to the surcharge, the taxpayer's right to rebut that presumption by establishing an error justifying why nothing was filed in France (Conseil d'Etat, decision no. 428898).

Is a Wyoming LLC treated differently from a Delaware LLC in France?

Potentially, because assimilation looks at the state statute and the operating agreement rather than the label. The Conseil d'Etat decision of 12 November 2025 turned on California law and on what the members had written into their agreement. Two LLCs formed in different states with different agreements can reach different French answers.

Can I keep the LLC and simply pay myself a salary from it?

A salary paid to someone working in France generally creates French payroll and social contribution obligations for the paying company, which means registering the LLC as an employer in France. It removes neither the corporate tax question nor the place of effective management question, and it adds a third set of filings.

Does the France United States tax treaty prevent France from taxing my LLC?

Only if the LLC qualifies as a US resident under article 4 and has no permanent establishment in France under article 5. A place of management counts as a permanent establishment, and article 4(2)(a) limits when France recognises a US citizen as a US resident. Both tests often fail at once.

My LLC has only US clients and no French customers. Does that protect it?

No. French corporate tax under article 209 I follows where the business is operated, not where the customers are. An LLC whose entire activity is performed from France is operated in France even if every invoice goes to a US address and every payment lands in a US bank.