The US LLC is sold to French residents as a zero-tax structure: transparent in the United States, owned by a non-resident, invisible in France. It is zero-tax only as long as nobody looks. France has four ways to tax it, the United States one filing obligation penalized at 25,000 dollars a year, and the way out is a regularization handled on both sides at once.
A French consultant forms a Wyoming LLC online in an afternoon. Her clients pay the LLC, the LLC pays nothing in the United States because she is not American and works from Lyon, and she declares nothing in France because the money is "in the company". Three years later, the French administration taxes the LLC's profits in her hands, with an 80% penalty, while the IRS sends a 25,000 dollar penalty notice for each year in which a form she had never heard of was not filed.
This article concerns French tax residents who are not American and who own, alone or with others, an LLC formed in Wyoming, Delaware or elsewhere, most often to invoice their services or to run an online business. Americans living in France follow different rules, which we flag in passing.
Part I deals with the American side. Part II with the four ways France taxes the LLC. Part III with French reporting. Part IV with regularization.
I. The American side: transparency does not erase obligations
A. A disregarded entity, whatever the owner's residence
A single-member American LLC is, by default, disregarded for American federal tax purposes, whatever the residence of its owner (Treas. Reg. § 301.7701-3(b)(1)); a multi-member LLC is, by default, a partnership. The idea that the LLC is "transparent because its owner is a non-resident" is a common misreading: it is transparent because of its default classification, and it would be the same for an American owner.
B. No federal income tax without American activity or American-source income
A non-resident owner is taxed in the United States only on American-source income and on income effectively connected with an American trade or business. Income from services is sourced where the services are performed: a consultant who works from France has, in principle, foreign-source income and no American federal income tax. The analysis changes as soon as the work is performed in the United States, or an office, an agent or inventory there turns the activity into an American trade or business, which an online business using American storage and fulfillment must examine carefully.
C. Form 5472 and the pro forma 1120: 25,000 dollars a year
The most immediate risk is not tax but reporting. A single-member LLC owned by a foreign person is treated, for this purpose only, as a corporation: it must file each year Form 5472 attached to a pro forma Form 1120 whenever it has reportable transactions with its owner, which include contributions and distributions, and even the initial funding of the company (Treas. Reg. § 1.6038A-1). The penalty is 25,000 dollars per form and per year, even when no tax is due. It requires an employer identification number. Most LLC formation services sell the company without mentioning it.
D. The State and the beneficial ownership question
The State of formation imposes its own annual report and fees, and the State where the activity is actually carried out may require registration, as we explained in our article on state selection. Conversely, the federal beneficial ownership report introduced by the Corporate Transparency Act no longer applies to entities created in the United States: since FinCEN's interim final rule of 26 March 2025, only companies formed abroad and registered in the United States must file it. The LLC is therefore not more transparent to the American authorities because of that law, contrary to what is sometimes written; it is transparent to the French authorities through bank information exchange.
II. The French side: four ways to tax
A. The French qualification of the LLC: a company subject to corporate tax
French law qualifies a foreign entity by comparing it with French legal forms, and the Conseil d'État has just clarified the decisive criterion. On 12 November 2025, it held that the limitation of the members' liability to their contributions is what distinguishes the limited liability company, the SA and the SAS from the partnerships of Article 8 of the CGI, that flexibility of management or family clauses do not prevent assimilation to a capital company, and that an American LLC whose members are liable only up to their contributions is assimilable to a French SAS, therefore subject to corporate tax by reason of its form (CE, 12 November 2025, n° 502894, Carmejane LLC). The American transparency of the LLC is therefore irrelevant in France: France sees a company. This was the hybrid-entity mismatch we described in our roadmap for French founders; it is now confirmed at the highest level.
B. The LLC managed from France: French corporate tax on all its profits
A company is subject to French corporate tax on the profits of enterprises operated in France (CGI, art. 209, I). An LLC whose only manager lives in France, which takes all its decisions there and has no staff or premises in the United States, is operated in France: it is subject to French corporate tax on all its profits. The treaty offers no protection, because a disregarded LLC is not taxed in the United States as a resident and therefore does not qualify as an American resident for treaty purposes. The reasoning has been applied to a company formed in England whose management was entirely in France: the Paris administrative court of appeal upheld French corporate tax on all its profits, with the ten-year assessment period and the 80% penalty for concealed activity, after finding that its foreign registered office was a mere mailbox (CAA Paris, 11 December 2024, n° 23PA01641). The same analysis transposes directly to an American LLC.
C. Article 155 A: the services of the resident invoiced by the entity
Sums received by an entity established outside France in return for services rendered by a person established in France are taxable in the name of that person when that person controls the entity, directly or indirectly (CGI, art. 155 A, I). Control is enough: there is no need to show a privileged tax regime or an absence of activity. A consultant who invoices her own services through her LLC is therefore taxable in France, personally, on the fees received by the LLC. Since 2024, if the LLC then pays those sums to her, the tax is deemed already paid on that payment (art. 155 A, IV), which avoids a second taxation.
D. Article 123 bis: the LLC that accumulates cash
An individual domiciled in France who holds at least 10% of a foreign entity subject to a privileged tax regime, whose assets consist mainly of securities, receivables or deposits, is taxed on the profits of that entity as if they were distributed (CGI, art. 123 bis). An LLC that keeps its profits as cash in an American bank account, rather than investing them in an operating business, falls squarely within this rule, since it bears no tax at entity level.
E. Articulating the four routes
These four routes are not cumulative on the same income: the administration chooses, and the taxpayer must anticipate its choice. For a consultant invoicing her own services, Article 155 A is the simplest route. For an operating business genuinely managed from France, it is corporate tax on all the profits, followed by dividend taxation on distributions. For an LLC that accumulates cash, Article 123 bis. The useful question is therefore never whether France will tax, but on which basis, and the strategy consists in choosing and documenting a coherent qualification rather than suffering the most expensive one.
III. French reporting and its sanctions
The French owner of an LLC must report what each route requires: the income taxed under Article 155 A or 123 bis in his personal return, or, if the LLC is operated in France, the corporate tax returns of the company itself. Every account opened, held, used or closed abroad must also be declared (CGI, art. 1649 A), under penalty of 1,500 euros per undeclared account (CGI, art. 1736, IV, 2); the LLC's American bank account, used by its owner, must be examined under this rule, and declaring it is the prudent course. The sanctions for an undeclared LLC are heavy: the assessment period extends to ten years for concealed activity and for undeclared foreign accounts (LPF, art. L169), and the absence of returns for a concealed activity carries an 80% penalty (CGI, art. 1728), as the Paris court applied in 2024.
IV. Regularizing
A. Both sides, at the same time
A regularization that treats only one side leaves the other exposed. On the American side, the missing Forms 5472 and pro forma 1120 must be filed with a reasonable cause statement; the procedure for delinquent international information returns is designed for this situation when no American tax is due. On the French side, the choice of the qualification determines the returns to be filed, the tax due and the penalties. A spontaneous correction before any audit avoids the qualification of concealed activity and its 80% penalty, which presupposes that the administration discovered the activity first. Where its conditions allow, the regularization window announced for 2027, which we analyzed in our article on the 2027 regularization window, may offer a framework, to be confirmed by the final text.
B. For the future: close, keep or restructure
Three options. Close the LLC, after regularization, and invoice through a French structure, which is the simplest for a consultant working from France. Keep it with real American substance, an office, staff, management in the United States, which changes the French analysis but creates an American taxable presence, as we detailed in our permanent establishment risk map. Or treat it openly as a French-taxed company, with French returns, if there is a reason to keep an American entity for commercial purposes. The option that no longer exists is the invisible LLC.
Conclusion
The American LLC owned by a French resident is transparent in the United States and opaque in France: the Conseil d'État confirmed in November 2025 that an LLC with limited liability is assimilable to a SAS, subject to corporate tax by reason of its form. From there, France has four routes: corporate tax when the LLC is managed from France, Article 155 A when it invoices its owner's services, Article 123 bis when it accumulates cash, and dividend taxation on distributions. The United States, for its part, requires an annual Form 5472 penalized at 25,000 dollars, even without tax.
The practical rule fits in one sentence: an LLC owned from France is not a zero-tax structure, it is a structure whose tax depends on the qualification its owner chooses and documents before the administration chooses it for him. For those who have used it without declaring it, the way out is a regularization conducted on both sides at once.
Frequently asked questions
I live in France and invoice my clients through a Wyoming LLC. Do I pay tax in France?
Yes. Under Article 155 A of the CGI, sums received by an entity established outside France for services rendered by a person established in France are taxable in that person's name when that person controls the entity. A consultant who invoices her own services through her LLC is therefore taxable in France on the fees received by the LLC, and if the LLC is managed from France, the administration can also subject it to French corporate tax on all its profits.
Is my LLC taxed as a transparent entity in France, as in the United States?
No, in principle. On 12 November 2025, the Conseil d'État held that an American LLC whose members are liable only up to their contributions is assimilable to a French SAS, and therefore subject to corporate tax by reason of its form. The American transparency of the LLC is irrelevant for French tax.
My LLC has no American income. Does it have to file anything with the IRS?
Yes. A single-member LLC owned by a foreign person must file each year Form 5472 attached to a pro forma Form 1120 whenever it has transactions with its owner, including contributions and distributions. The penalty is 25,000 dollars per form and per year, even when no tax is due. The federal beneficial ownership report, on the other hand, no longer applies to entities created in the United States since March 2025.
How do I regularize an LLC I never declared?
On both sides at once. In the United States, by filing the missing Forms 5472 with a reasonable cause statement. In France, by choosing and documenting the applicable qualification, then filing the corresponding returns, ideally before any audit, which avoids the qualification of concealed activity and its 80% penalty. For the future, the LLC should be closed, given real American substance, or openly treated as a French-taxed company.
