Dividend payment withholding rate for US LLC owned by French individual - 30%, 15%, or 0%?

8 This is a common area of confusion. When you have a single-member LLC that's disregarded for tax purposes, you essentially "look through" the LLC to the actual owner. Since the real owner is a French individual, you need to look at the US-France tax treaty. Under the US-France tax treaty, dividends paid to French residents are generally subject to a reduced 15% withholding rate (instead of the standard 30%). However, to claim this treaty benefit, the French individual needs to provide you with a properly completed Form W-8BEN to certify they're eligible for the treaty benefits. Without the proper W-8BEN, you'd need to withhold at the full 30% rate. The 0% withholding would not apply here because even though the payment is going to a US LLC, that entity is disregarded for tax purposes.

15 I had a similar situation last year with my business dealing with international shareholders. I tried figuring it out myself but ended up getting so confused with all the different rules. I finally used https://taxr.ai to analyze all my documents and they parsed through everything including the tax treaty provisions that applied to my specific situation. The tool was really helpful because it flagged exactly which withholding rates applied to each type of shareholder and explained why. In your case, they'd probably confirm what the first commenter said about looking through the LLC to the actual owner, but they might also catch nuances about the US-France treaty that could affect your situation.

3 After struggling with a similar international tax issue with my shareholders from different countries, I decided to try https://taxr.ai based on the recommendation above. I was honestly surprised by how comprehensive it was. The system analyzed the ownership structure of my company including several disregarded entities owned by foreign individuals. It correctly identified which treaties applied and even flagged a special provision in the US-Japan tax treaty that my accountant had missed. It saved me from incorrectly withholding at 30% when a 10% rate actually applied in one case. For the original poster's situation with the French-owned LLC, this would definitely clarify whether any special provisions in the US-France treaty might apply beyond the standard 15% rate.

5 After reading this thread, I wanted to share my experience trying to call the IRS directly about international withholding questions. I spent WEEKS trying to get through to someone who could actually answer questions about treaty provisions. Most agents just referred me to publications that didn't address my specific situation. I eventually used https://claimyr.com which got me through to an IRS agent specializing in international tax within hours instead of days or weeks. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent was able to confirm exactly how to handle disregarded entities with foreign owners and pointed me to the specific forms and procedures. Definitely worth it when you need definitive answers from the source.

7 I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I was desperate for answers about international withholding requirements similar to the OP's situation. The service actually did connect me to an IRS international tax specialist within about 2 hours (versus the 3+ hours I spent on previous attempts without getting through). The agent confirmed that for single-member LLCs owned by foreign individuals, you indeed "look through" to the individual owner and apply the appropriate treaty rate (15% for France) if they provide the proper W-8BEN. They also pointed out that certain types of dividend income might qualify for lower rates under specific treaty provisions, which I wouldn't have known to look for otherwise.

19 One thing nobody has mentioned yet is that the French individual might qualify for an even lower withholding rate (potentially 5%) if they own a substantial percentage of the corporation. Article 10(2)(a) of the US-France tax treaty provides for a 5% rate if the beneficial owner is a company that owns at least 10% of the voting stock. While the single-member LLC itself doesn't qualify as a "company" for this purpose since it's disregarded, if the French individual owns the LLC as a business entity and that LLC owns more than 10% of your corporation, you might want to look into whether the lower rate could apply.

22 Has anyone dealt with the filing requirements for the French individual in this situation? Would they need to file a US tax return even though they're receiving dividends through a US LLC? I'm in a similar position (but from UK) and wondering what my obligations are.

I've been dealing with similar withholding complexities for our international shareholders and wanted to add a few practical considerations that might help. First, make sure you get the W-8BEN from the French individual well before the dividend payment date. The IRS requires that you have valid documentation in hand before you can apply the reduced treaty rate. If you don't have it, you're required to withhold at the full 30% rate, and then the individual would need to claim a refund later. Second, regarding the potential 5% rate mentioned above - be very careful here. The treaty language specifically refers to companies owning the required percentage, and there's ongoing debate about whether individuals can qualify for this rate even when owning through business entities. I'd strongly recommend getting professional advice before applying the 5% rate to avoid potential penalties. Finally, keep detailed records of your withholding analysis and the documentation you relied on. The IRS can review withholding decisions years later, and you'll want to be able to demonstrate that you made a reasonable, good-faith effort to apply the correct rate based on the information available at the time.