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The LLC USA offers many advantages to French and foreign entrepreneurs, such as the anonymity of the managers, the semi-transparency of the tax system, the flexibility of operation and the limited liability of the partners. Thus, many e-merchants and dropshippers have chosen this legal entity.
It is important to keep in mind that being a partner in an LLC triggers various reporting obligations in France and in the United States that must be fulfilled in order not to be targeted by the IRS or the French tax authorities.
The tax structure leading to the transfer of shares from an LLC to a SASU allows the LLC to increase the protection of the liability of the partners and to remunerate the managers in a more important way.
Various declarations are the responsibility of the sole partner of the LLC, French tax resident, both in France and in the USA. When the sole LLC partner chooses to have this entity held by a SASU, the reporting obligations are significantly reduced.
More concretely, an individual must declare his or her foreign source income using the following forms:
SASUs are automatically subject to corporate income tax under article 206 of the French General Tax Code. Pursuant to article 239 bis AB of the CGI, the sole shareholder of a SASU may choose to be subject to the partnership regime (option for young independent SMEs). However, this choice is only open to the sole shareholder, therefore, the stated tax arrangement can be very advantageous.
One should not neglect the legal documents necessary for the implementation of these tax solutions, the statutes must be very rigorously drafted in order not to risk financial penalties.
In short, the holding of an LLC by a SASU is a very advantageous set-up in order to reduce the tax obligations incumbent upon the sole partner of the LLC.
The formalists of ExpertLLCUSA.com accompany you in the setting up of this assembly (drafting of the legal documents), as well as in the management of the latter.
The LLC declares its profit but it is the partners who are liable for income tax and social security contributions because of the so-called "semi-transparent" status of the LLC USA. The taxation in France is done with the income tax on the totality of the profit.
The SASU is automatically subject to corporate income tax (article 206 of the CGI), unless an option for the partnership regime is chosen (article 239 bis AB of the CGI). Thus, when the SASU holds shares in your LLC, the profits of this American entity may be subject to French corporate income tax.
The profit of the LLC is transferred to the SASU and since the SASU is taxed as a corporation, the profit of the LLC USA will be taxed as well.
Do not hesitate to make an appointment with our tax experts to learn more about the tax system applicable to this arrangement.
The tax penalties attached to the non-respect of the declarative obligations of the LLC can be considerable. However, ExpertLLCUSA.com suggests you to make a SASU (parent company) hold the shares of a LLC (daughter company), allowing to reduce the responsibility of the LLC and consequently, of the partners.
Another advantage inherent to this arrangement is the possible deduction of expenses of a French entity taxed at the IS. Concretely, if you have premises or a professional vehicle in France, it will be possible to write off the cost of the vehicle. This solution is not possible within the framework of an LLC held by an individual and would lead to a recharacterization in France and in the USA.
When the LLC is held by a SASU, it is possible to establish pay slips to remunerate the manager, which will ultimately validate the quarters to receive a pension and a better social protection.
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.
