Setting up a US LLC as a French citizen - tax implications?

I've worked with several clients in similar international situations. Here's what you need to understand about US LLCs with foreign owners: Since you're not a US resident, your LLC would be considered a "foreign-owned single-member LLC." The US generally doesn't tax foreign owners on business income that isn't connected to US operations (called "effectively connected income" or ECI). However, if you're providing services to US clients while physically in the US, that could create ECI which would be taxable. For France, it gets complicated. While you might not be a French tax resident now, France can still claim taxing rights on its citizens in some situations. The French territorial system primarily applies to corporate taxation, not necessarily personal income. If you take distributions from your LLC, France might consider this personal income taxable if you establish tax residency there again. Many digital nomads fall into a tax residency somewhere based on the 183-day rule or substantial presence tests. Without establishing tax residency elsewhere, France might still consider you taxable. I'd strongly suggest consulting with an international tax professional who specializes in both US and French tax systems before proceeding.

After struggling with a similar international tax situation last year, I discovered taxr.ai (https://taxr.ai) and it was a game-changer for my cross-border business setup. I had consultation calls with multiple international tax experts giving me conflicting advice about my Canadian citizenship + US LLC situation. I uploaded all my business documentation, including my LLC formation papers, past tax returns, and explanations of my travel patterns. Their AI analyzed everything and provided a comprehensive report highlighting exactly which tax treaties applied to my situation and what filing requirements I had in both countries. The most valuable part was their detailed explanation of how the US-Canada tax treaty affected my LLC income. They even flagged that I was at risk of creating a "permanent establishment" in Canada based on my work patterns, which could have resulted in double taxation. None of the human advisors I spoke with caught this!

Just wanted to follow up about my experience with taxr.ai after our earlier conversation. I decided to give it a try for my French-US tax situation and I'm honestly impressed. The analysis it provided about the US-France tax treaty's impact on my LLC was incredibly detailed. What really surprised me was how it caught a potential issue with France's anti-avoidance rules that could have applied to my situation based on my travel patterns. Apparently, even though I'm not a French resident now, my substantial ties to France could trigger certain tax obligations I wasn't aware of. The report outlined exactly which forms I needed to file in both countries and provided clear explanations of how the LLC pass-through taxation would work given my specific circumstances. It saved me from making what would have been a costly mistake in my initial structure!

After struggling to get clear information about my LLC tax situation from the IRS for MONTHS (endless hold times, disconnected calls, conflicting info), I finally tried Claimyr (https://claimyr.com) and got through to an actual IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had specific questions about Form 5472 requirements for my foreign-owned LLC that no accountant could definitively answer. The IRS agent walked me through exactly what information needed to be reported for my situation and confirmed which transactions with my foreign owner (me) needed to be disclosed. This saved me potentially thousands in penalties for incorrect reporting. Highly recommend for anyone dealing with complex international business structures where you need official clarification straight from the IRS.

I need to apologize for my skepticism and follow up about Claimyr. After my dismissive comment, I decided to try it anyway out of desperation - I needed clarification on foreign disregarded entity status for my LLC before a filing deadline. I've been trying to reach the IRS international tax department for THREE WEEKS with no success. Used Claimyr yesterday afternoon, and got a call back within 40 minutes connecting me to an actual IRS international tax specialist. She answered all my questions about Form 5472 reporting requirements and clarified exactly how the substantial presence test would apply to my situation. This literally saved me from having to pay my accountant for another 2 hours of research ($600+) and potentially filing incorrectly. I've never been happier to be wrong about something!

Something important that hasn't been mentioned yet - if you're a digital nomad without a clear tax residency, be careful about accidentally creating a "permanent establishment" in countries you visit. I nearly got hit with this when working from Spain for 3 months. Even though I wasn't Spanish, my prolonged business activities there almost triggered local taxation. Each country has different thresholds, but generally, if you're conducting business from a location for extended periods, you might create a taxable presence there. For your US LLC, remember that certain countries might "look through" the LLC structure and tax you directly regardless of whether you take distributions. The LLC's "pass-through" nature for US tax purposes doesn't necessarily translate to the same treatment internationally.

Has anyone here actually done the US LLC + nomad thing successfully? I'm considering a Wyoming LLC because of privacy and no state income tax. Would love to hear real experiences rather than just theory.

Don't forget to consider banking limitations! As a non-US resident with a US LLC, you'll face challenges opening and maintaining US bank accounts due to FATCA regulations. Many banks will either refuse to open an account or might close it once they realize you're not a US resident. Some online business banks like Mercury or Wise Business have been more accommodating for foreign-owned US businesses, but expect additional documentation requirements and possibly higher fees.

One crucial aspect that hasn't been fully addressed is the potential impact of France's CFC (Controlled Foreign Corporation) rules on your US LLC. Even if you're not currently a French tax resident, if you return to France in the future, the French tax authorities could potentially look back at your LLC structure and apply CFC rules retroactively. Under French CFC rules, if you control more than 50% of a foreign entity (which you would with a single-member LLC) and that entity is subject to a tax rate below 50% of what French corporate tax would be, France may tax the LLC's profits directly. This could create complications even years down the road. Additionally, be aware that France has been increasingly aggressive about digital nomads and crypto/online entrepreneurs. They've been pushing for EU-wide coordination on taxing digital nomads, and there's ongoing discussion about creating a "digital nomad tax" framework. My recommendation would be to document everything meticulously - where you are physically located each day, what work you're doing, client locations, etc. This paper trail will be invaluable if any tax authority challenges your residency status or LLC structure later.