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The LLC USA offers many advantages to French entrepreneurs such as anonymity, operational flexibility, protection of the partners' personal assets, etc.)
However, being a partner in an LLC creates reporting obligations in your country of residence as well as in the United States.
An advantageous arrangement is then possible through the transfer of the shares of your LLC to a SASU or EURL.
It is also possible for a French company to apply for an EIN number in order to be able to sell on the American territory.
A French individual who is a partner in an LLC must declare the income from this company by filling out various forms. However, by transferring the shares to a SASU or to a sole proprietorship, the partner does not have to go through these tedious declarations.
More concretely, a French tax resident will have to declare his foreign source income by filling out various forms (2047, 2024 C, 2042 C PRO, 3916). Whereas in the case of the arrangement described above, the sole shareholder simply declares the income from the company, thus significantly reducing the reporting obligations.
The LLC USA is a disregarded entity for tax purposes, it is called a disregarded entity. Therefore, corporations considered NON-ETBUS (having non-US resident members), do not have to pay US income tax.
The LLC USA is also fiscally transparent, meaning that the sole partner of the SASU or the sole proprietorship will have to pay income tax in France on the profits of the LLC. The partner will have to pay income tax even if the profits have not been paid to the partners and a reserve has been decided.
SASUs are, in principle, subject to corporate income tax under article 206 of the CGI, so the profits of the American LLC will be subject to corporate income tax because the SASU is subject to it.
Do not hesitate to ask our expert formalists to clarify the advantages of this tax system. Moreover, our expert formalists can validate your scheme with a partner lawyer if necessary.
Increase protection for the sole proprietor. Failure to comply with the reporting requirements of an LLC USA can result in significant penalties. While the LLC is a limited liability entity for the partners, the transfer of shares to a SASU/sole proprietorship further increases the liability limitation of the sole partner.
The payment of a remuneration. The SASU or the sole proprietorship has the advantage of allowing the payment of a remuneration to the sole shareholder, which is not negligible for a future retirement as well as for social protection.
Deductions to reduce the tax base. You can only benefit from this advantage by creating a French entity, through the transfer of shares to a SASU or individual company.
The combination of American LLC / SASU or EURL thus allows to take advantage of the positive points of the LLC while protecting the sole partner .
There are various points to watch out for when choosing the entity to be formed:
A different social regime. The sole proprietor of a sole proprietorship is a non-salaried worker, unlike the president of a SASU who is considered as a salaried employee. This difference leads to a greater protection of the SASU manager but also to more important social charges. It is important to keep in mind that the reporting obligations are more restrictive for a SASU.
Does the managing partner want to pay himself a higher salary? The best choice is a sole proprietorship
The important point for the sole partner is the social protection? We suggest him to turn to the SASU, since the social protection is more consequent and he will not have to pay social contributions if he does not remunerate himself.
It is quite possible for a French company to apply for an EIN if it wishes to sell directly in the USA. This procedure must be justified and is very specific. If your company is in this situation, our experts will provide you with a tailor-made quote in order to quickly obtain an EIN for your French company.
Have a question? Do not hesitate to contact our expert formalists on the creation, management, and declaration of American LLC. Through a free interview, he will answer all your questions.
