U.S. TAX GUIDE IN FRANCE
How should Americans report French LLC ownership to the IRS?
If you’re an American with a 10% or more ownership interest in a French LLC, you need to report this to the IRS using specific forms attached to your US tax return. This requirement is primarily for reporting purposes unless you receive income like salaries or dividends from the company.
What if you own more than 50% of a French LLC?
Owning over 50% of a French LLC means the IRS might tax you on the company’s net income based on your ownership share. However, the corporate taxes paid in France often offset your US tax liability due to higher French tax rates, making it less of a concern for many Americans.
Why file foreign corporation returns for less than 10% ownership?
Even with less than 10% ownership, you might need to file returns due to “constructive ownership,” where relationships (like a spouse owning a majority) could imply indirect control. The IRS requires this to ensure full disclosure and compliance.
What should you do if you missed filing foreign corporation returns?
If you haven’t filed the required returns, it’s crucial to address this promptly to avoid penalties. Amending filings via the IRS Streamlined Offshore Filing Procedure can help reduce penalties. This program lets you catch up on filings and disclose all needed information without facing severe penalties, like the standard US$10,000 fine per missed filing.
Is there a risk of double taxation for Americans with French LLCs?
Generally, no. The taxes paid in France usually offset US tax liabilities due to foreign tax credits. The main concern is meeting all reporting and filing requirements to stay compliant with US tax laws.