Opening a US Entity from France in 2026: LLC, C-Corp or Subsidiary?

Many French founders ask us the same question: "To launch in the US, should I open a Delaware LLC or set up a subsidiary of my French company?" The answer is never binary. It depends on your business model, your cap table, your US customers, your investor profile — and most importantly, on how the French tax authority and the IRS will characterise the income generated across the Atlantic.

This guide is built for a French founder or SME owner who must arbitrate between three legal vehicles to launch or structure a US activity: the LLC, the C-Corp, or the subsidiary of a French parent. We cover French tax treatment, reporting duties, permanent establishment risk, the role of the 1994 France-US tax treaty, and the operational steps (EIN, ITIN, banking, accounting).

Disclaimer: this content is written by a French accounting firm. References to US tax law are illustrative and must be validated by a US CPA. This is not personalised tax advice.

The LLC (Limited Liability Company)#

The LLC is the most flexible US vehicle. It combines limited liability with the pass-through taxation of a partnership. By default, the IRS treats:

• A single-member LLC as a disregarded entity — fully transparent. Profits flow up to the sole member.
• A multi-member LLC as a partnership — Form 1065, pass-through taxation.

The LLC may elect to be taxed as a C-Corp (Form 8832) or as an S-Corp (US residents only).

Key advantage: management flexibility, no double taxation in the US. Major limitation for a French founder: US transparency may collide with how France characterises the income.

The C-Corp (C Corporation)#

The C-Corp is the standard US capital company, the functional equivalent of a French SAS. It is opaque for tax purposes: the entity pays federal corporate income tax (21 % federal since 2018, plus variable state tax) on its profits, then shareholders are taxed on dividends.

Advantages:

• Required structure for US VCs (preference for Delaware C-Corp).
• Supports preferred shares, stock options, SAFE notes.
• Compatible with the French parent-subsidiary regime if owned by a French parent.

Limitation: economic double taxation (corporate + dividend), heavier filings.

The subsidiary of a French parent#

Legally in the US, a "subsidiary" is in practice a C-Corp (typically Delaware C-Corp) whose shares are held by your French parent company. The label "subsidiary" is French: starting from 50 % ownership under article L233-1 of the French Commercial Code.

This is the preferred structure for:

• A French SME opening a US office with employees;
• A group consolidating its accounts;
• A profit-repatriation strategy under the parent-subsidiary regime (article 145 CGI).

This is where many founders get caught off-guard. French tax treatment does not follow the US classification.

Case 1: Single-member LLC owned by a French tax resident#

In the US, transparency. In France, the tax authority may analyse the LLC based on its legal features (limited liability, separate legal personality). Doctrine and case law generally lean towards classifying it as an opaque foreign capital company for French purposes.

Consequence: you may be taxed twice and unable to credit the US tax — because no US corporate tax was paid at the entity level (transparency). The risk of economic double taxation is real.

Reference: French Conseil d'État case law (CE, 24 Nov. 2014, no. 363556 Diebold) leaned towards opacity for a single-member LLC in some configurations, but the analysis remains fact-based. Have the qualification validated by a tax counsel before structuring.

Case 2: C-Corp owned by a French tax resident#

C-Corp = opaque capital company, in both jurisdictions. Things align:

• US federal corporate income tax at the entity level.
• Dividends paid taxed in France under the flat tax (PFU 30 %) or progressive scale, with foreign tax credit for the US withholding (default 15 %, treaty-permitting).

CGI article 209 B: if the C-Corp benefits from a privileged tax regime (local tax below 50 % of what French CIT would have been), profits may be reattributed to the French resident's taxable income. This risk is low for a standard C-Corp at 21 % federal + state, but must be documented.

Case 3: C-Corp subsidiary of a French parent (parent-subsidiary regime)#

This is the cleanest scenario. If your French parent holds at least 5 % of the C-Corp's shares for 2 years (CGI article 145), dividends flowing up to France are 95 % exempt (a 5 % share of fees and charges is reintegrated).

This structure enables:

• Clean accounting consolidation;
• Optimised profit repatriation;
• A clean basis for future M&A or restructuring.

The France-US tax treaty of 31 August 1994 (published in the JORF, amended by protocols) resolves residence and taxation conflicts. Four key mechanisms:

Important: the treaty does not apply automatically. You must evidence French tax residence (W-8BEN-E on the US side, certificate of residence on the French side) and keep documentation for the duration of the audit period (10 years in practice).

Many founders believe they can "test the US market" from France without creating an entity, just by sending a salesperson or opening an AWS account. This is not tax-neutral.

A permanent establishment (PE) is defined in article 5 of the treaty. It exists as soon as you have in the US:

• A fixed place of business (office, workshop, non-purely-logistic warehouse);
• A dependent agent authorised to conclude contracts on behalf of your company;
• A construction site lasting more than 12 months.

Consequence of an undeclared PE: the IRS can tax the share of profits attributable to the PE, with penalties. France will still tax worldwide income but, if you correctly declared in the US, you avoid double taxation via the foreign tax credit.

In practice: a salesperson employed by your French company who spends 6 months a year at a US client and signs purchase orders on behalf of the French company can be enough to create a PE. This is the leading source of cross-border audit adjustments we see in practice.

EIN (Employer Identification Number)#

The EIN is the US equivalent of a SIREN. Every US entity — including LLCs and C-Corps — must obtain one from the IRS to open a bank account, hire, or invoice.

Process: Form SS-4, free. For a non-resident founder without an SSN, the request is filed by fax or mail (4-6 weeks). A third-party designee can speed things up. See our EIN guide.

ITIN (Individual Taxpayer Identification Number)#

The ITIN is for individuals without an SSN who have US filing duties (e.g. an LLC member, a paid director). Filed via Form W-7, requires passport certification. See our ITIN guide.

Banking#

Opening a US business bank account for a non-resident-owned entity is harder in 2026 than a few years back (KYC, AML). Some routes:

• Mercury or Brex (business neobanks, accessible to non-residents).
• Wise Business or Airwallex for multi-currency — see our Airwallex review.
• Traditional US banks (JP Morgan Chase, Bank of America): usually require a physical visit and EIN certification.

Accounting and US filings#

Every US entity must keep books, file an annual return (Form 1120 for the C-Corp, 1065 for the LLC partnership, 1040-NR for non-resident individuals), and meet state obligations (sales tax, Delaware franchise tax, etc.). See our 1040-NR guide.

On the French side, do not forget:

• The Banque de France filing for foreign direct investments (Form 1) once the initial or cumulative amount exceeds €15 M or 10 % of capital.
• The declaration of foreign bank accounts (Form 3916).
• The disclosure of foreign subsidiaries in the corporate tax return (annexe 2065-bis).

We regularly support French founders who already committed to a Delaware LLC "because it was easy to set up online", and discover after the fact the French tax complexity.

Our conviction is that the choice of vehicle must start from a business question, not a legal question:

1. Do you have real US customers or a US hiring plan within 12 months? If yes, go for a C-Corp (subsidiary or direct ownership depending on the cap table).
2. Are you raising from US VCs? US VCs require a Delaware C-Corp, period.
3. Just testing the market without physical presence? Stay on your French entity and invoice cross-border, no PE. Simpler and cheaper.
4. You are a freelancer/consultant serving a US client? No need for an LLC. Invoice from your French entity with a W-8BEN-E to claim the treaty.

A single-member LLC owned by a French founder is rarely the right answer, because of the asymmetry between US transparency and French opacity.

The most underestimated risk is neither double taxation nor structuring cost: it is the permanent establishment created by accident. A salesperson travelling 8 months a year in the US, a freelance Country Manager in San Francisco signing contracts on behalf of the French entity, a 3PL warehouse storing US e-commerce inventory — any of these can flip part of your worldwide profit into US taxation, without you ever creating a US legal entity.

The cost of a retroactive cleanup (back taxes, penalties, interest) far exceeds the cost of structuring properly upfront.

Before signing any form:

• ☐ Expected revenue profile over 24 months (US revenue, margin, payroll);
• ☐ Planned physical presence (you, employees, freelancers);
• ☐ Target investors (French vs US);
• ☐ Profit-repatriation strategy (local reinvestment vs dividend to France);
• ☐ Ownership : personal, French holdco, or directly the French OpCo;
• ☐ Exit horizon (M&A, IPO, family transfer);
• ☐ US compliance budget (CPA, registered agent, sales tax) — count €4-12k/year minimum.

1. Increased DGFiP scrutiny of offshore structures, including standard Delaware setups, when the ultimate beneficial owner is French.
2. CARF (Crypto-Asset Reporting Framework): LLCs/C-Corps holding digital assets face stronger reporting duties from 2026.
3. Pillar Two / OECD 15 %: groups above €750 M global revenue face minimum taxation. Few SMEs concerned, but worth anticipating.
4. France-US treaty: no major protocol entered into force in 2026, but discussions on digital services continue.
5. Beneficial Ownership Information (BOI) report with FinCEN: despite recent rulings suspending the duty for US-formed entities, foreign-formed entities registered to do business in the US remain in scope.