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U.S. EXPAT TAX GUIDE – FRANCE

How do Americans report ownership in a French LLC to the IRS?

If you are an American with a 10% or greater ownership interest in a French LLC (Limited Liability Company), you must report this interest to the IRS on specific forms attached to your US tax return. This requirement is mainly for informational purposes unless you receive income from the company, such as salaries or dividends.

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What changes if you own more than 50% of a French LLC?

Owning more than 50% of a French LLC requires more complex reporting because the IRS may tax you on the net income retained within the company, proportional to your ownership. However, the corporate tax paid in France can usually offset this US tax liability, especially since French corporate tax rates are typically higher than those in the US.

Why file foreign corporation returns with less than 10% ownership?

Even if you own less than 10% of a French company, you might still need to file foreign corporation returns due to “constructive ownership.” This concept means you could indirectly control or benefit from more of the company through relationships, such as a spouse who owns a majority of the shares. The IRS requires this disclosure to ensure transparency and compliance.

What steps should you take if you haven’t filed foreign corporation returns?

If you haven’t filed the required foreign corporation returns, address this as soon as possible to avoid penalties. Amending previous filings through the IRS Streamlined Offshore Filing Procedure can help mitigate penalties. 

This procedure allows you to catch up on filings and provide the necessary information to the IRS without facing the usual severe consequences for late filing, which include significant penalties.

Is there a risk of double taxation for Americans owning French LLCs?

Typically, Americans who own companies in France don’t have to worry about paying US tax in addition to French tax. Taxes paid in France generally offset any potential US tax liability due to foreign tax credits. The main concern is ensuring all reporting and filing requirements are met to comply with US tax laws.

Why partner with a specialist Expat accountant?

Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in France. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.

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