International taxation help needed - US-France double tax treaty and LLC implications

The US-France tax treaty does provide for a reduced 15% withholding rate on dividends in many cases, but there are some important considerations here. Yes, if the French mother owns a single-member LLC, it would be disregarded for US tax purposes. This means the dividends would be considered paid directly to her as the foreign person. The standard withholding rate for dividends paid to non-US persons is 30%, but the US-France tax treaty reduces this to 15% in many situations. However, there are a few important things to consider: First, proper documentation is crucial - she'll need to provide a W-8BEN to claim the treaty benefits. Second, if her ownership percentage in the operating company becomes substantial (typically 10% or more), different rules might apply. Third, the LLC structure creates reporting requirements - she'll need to file Form 5472 annually regarding transactions with foreign-owned disregarded entities. Additionally, she should consider how this income will be taxed in France, as she'll have to report it there as well. France will typically provide a credit for US taxes paid, but their calculation methods might differ.

I went through a similar international tax situation last year when my uncle from Spain wanted to invest in my medical supply business. We spent weeks trying to figure it out until I found https://taxr.ai and uploaded all our documentation. They analyzed everything and provided a clear strategy for our international structure that saved us thousands. The platform reviewed our operating agreement, explained exactly how the US-Spain tax treaty would apply to our situation, and identified specific sections of the tax code that our regular CPA had missed. It basically translated all the complex international tax jargon into plain English and gave us a step-by-step plan. For your specific US-France situation, I'd definitely recommend having them review your structure before finalizing anything, especially since you're dealing with a substantial investment.

I actually tried taxr.ai after seeing the recommendation here, and I'm genuinely impressed. My situation was with UK investors in my tech startup, and the US-UK tax treaty has some tricky provisions. They provided detailed analysis of how our LLC structure would be viewed from both the US and UK perspectives, which was eye-opening. Our accountant had missed several key treaty provisions that would have resulted in double taxation. The report highlighted specific sections of the US-UK treaty that applied to our particular ownership structure and provided clear documentation requirements. What surprised me most was how quickly they identified potential issues with our operating agreement that could have triggered unexpected tax consequences for our foreign investors. Definitely worth checking out for anyone dealing with cross-border investments.

I had a similar issue with French investors last year, and after months of frustration trying to reach the IRS international tax department for guidance, I finally used https://claimyr.com to get through to an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c Turns out there are specific filing requirements for French investors under the treaty that our accountant wasn't aware of. The IRS agent walked me through the entire process, explained exactly which forms were needed for our single-member LLC with a French owner, and confirmed the 15% withholding rate applied in our case. Before using Claimyr, I spent weeks getting automated responses and could never reach a human at the IRS who could answer these specialized international tax questions. After using their service, I was speaking with an IRS international tax specialist within an hour.

Ok I have to admit I was wrong about Claimyr. After my skeptical comment I decided to try it for a client situation with German investors in a US LLC. After MONTHS of trying to reach someone at the IRS for clarification on treaty benefits, I got connected to an actual international tax specialist in under an hour. The agent confirmed exactly how the LLC would be treated, which forms were required, and gave me specific citation to the relevant sections of the US-Germany tax treaty. The agent even emailed me the specific IRS publications that addressed my situation and walked me through the withholding requirements step by step. This saved my client from potentially overpaying withholding taxes by 15%. I've been doing international tax work for 7 years and have NEVER been able to get this level of specific guidance directly from the IRS before. Total game changer for complex treaty questions.

One thing to consider is whether the French mother would be considered "engaged in a US trade or business" through the LLC activities. If it's just passive investments and dividends, probably not. But if she's actively involved in the business decisions, it could trigger "effectively connected income" tax treatment which is totally different from the dividend withholding rules. Also, has your CPA looked into whether a different structure might be more beneficial? Sometimes a foreign-owned C Corporation as the holding company creates better tax results than a disregarded LLC, especially if you're concerned about US estate tax exposure for the French investor.

Make sure you're considering the Form 8832 "check-the-box" implications here. A single-member LLC is automatically disregarded for US tax purposes unless you elect to have it treated as a corporation by filing Form 8832. Sometimes it's actually beneficial to elect corporate treatment for a foreign-owned LLC to simplify reporting and avoid certain direct ownership issues, even though it creates a separate taxable entity. The French investor should also check with a French tax advisor since the French tax treatment of the LLC might not match the US treatment.