US LLC with a French subsidiary: accounting, VAT and corporate tax

Quick answer. A French subsidiary of a US LLC is a French company (SAS or SARL) subject to corporate income tax at 25%, which keeps its books under the French general accounting plan. It registers for VAT on its own and does not depend on the tax treatment of the US LLC.

Many US founders reach out with the same instinct: "my LLC is already set up in Delaware, I will simply invoice my French clients from that structure." The reasoning is understandable, but it raises questions of tax characterization, VAT and representation in France that rarely settle so easily. Setting up a French subsidiary changes the picture: it draws a clear line between what the US parent does and what the French structure does.

This article explains how a US LLC and its French subsidiary fit together in practice: who pays which tax, which accounts to keep, how to handle VAT, and where the pitfalls lie. The goal is to give you a clear reading before you decide on your structure.

French tax law does not automatically recognize the US characterization of an entity. The tax authority and the courts reason by comparison: they match the LLC to the closest French form using a body of indicators (articles, operating rules, extent of members' liability, free transferability of shares), setting aside the original tax label.

This reasoning has a concrete consequence. A US LLC may be treated as "translucent", that is, assimilated to a partnership within the meaning of article 8 of the French Tax Code, if it does not establish that it elected in the United States for the corporate tax regime (C-corp). The doctrinal framework applicable to US partnerships is set out in the BOFiP (BOI-INT-CVB-USA-10-20-10).

Caution is needed here. The characterization depends on the specific features of each LLC and on its US tax election. It is never decided mechanically, and it is precisely this uncertainty that makes the treatment of flows delicate when the LLC wants to operate directly in France.

Our reading. As soon as a US LLC wants a lasting presence in France, the clearest route remains a French subsidiary, set up as an SAS or an SARL. A French capital company is subject by law to French corporate income tax and keeps its books under the general accounting plan, regardless of how the parent LLC is treated in the United States. You thereby remove the characterization uncertainty for the French operating side.

The legal separation between the LLC and its subsidiary translates into a separation of obligations. Here is the principle split.

This grid shows the appeal of the subsidiary: it absorbs most French obligations and leaves the LLC in its original framework, subject to the flows that go up to it.

The French subsidiary is subject to corporate income tax on its result. The standard rate is 25%.

A reduced rate of 15% exists on the portion of profit up to or equal to 42,500 euros, but it is conditional (French Tax Code art. 219, I-b). It targets SMEs whose pre-tax turnover is below 10 million euros and whose capital, fully paid up, is held to at least 75% by individuals.

This is where the structure with a parent LLC sets a limit worth knowing. A subsidiary held by an LLC, which is a legal person, does not in principle meet the condition of 75% ownership by individuals. The consequence is direct: the subsidiary's profit is in principle taxed at the standard rate of 25%, without the benefit of the reduced rate.

The underestimated risk. Some founders build the 15% rate into their forecast without checking the ownership chain. When the holding or parent company is a legal person, that rate usually falls away. It is wiser to build the forecast on 25% and to treat any reduced rate as a possibility to confirm rather than as a given.

VAT is one of the topics where the parent and subsidiary confusion costs the most time. Two cases must be distinguished.

First case, the French subsidiary. As a French company, it registers for VAT directly and obtains an intra-EU number, with no tax representative. It invoices, collects and deducts VAT under ordinary rules. The basic exemption remains possible within the applicable thresholds: 37,500 euros for services and 85,000 euros for goods, the single 25,000-euro threshold having been dropped by Law no. 2025-1044 of 3 November 2025.

Second case, the US LLC operating directly, without a subsidiary. If the LLC itself carries out taxable operations in France as a company established outside the European Union, it must in principle appoint a tax representative (French Tax Code art. 289 A). This point is often misunderstood: the existence of a tax treaty between France and the United States does not exempt a US company from this obligation when it is liable for VAT in France.

Trade-off. Invoicing directly from the LLC may look faster to set up, but it can trigger the appointment of a tax representative and complicate the monitoring of French VAT. Creating a subsidiary adds a structure and a set of accounts, but it durably simplifies the VAT chain and the relationship with French clients. The right choice depends on the volume of activity planned in France and on how lasting it is.

This is the question that comes up most often: do you need to keep both US and French accounts?

The French subsidiary keeps a single set of official accounts, under the general accounting plan (ANC regulation 2014-03). The consolidation reporting to the US parent, usually under US GAAP, is a separate adjustment built from those French accounts. It is not a second set of official books, but a management view intended for the group.

In practice. We organize the French accounting under the general accounting plan, then build an adjustment bridge for group reporting. This avoids double entry and ensures that the French tax return package and the US reporting start from the same set of entries, simply presented differently.

The French subsidiary falls within the scope of the electronic invoicing reform. The receipt of electronic invoices becomes mandatory for all taxable businesses from 1 September 2026. For issuance, the timetable is staggered: 1 September 2026 for large enterprises and mid-sized companies, 1 September 2027 for SMEs, very small businesses and micro-businesses.

Watch points 2026. A subsidiary of a foreign group is sometimes tied to a US invoicing tool that does not handle the formats and transmission expected in France. Check early whether your invoicing chain is compatible with the reform, because rebuilding a compliant circuit can take several weeks of configuration.

Once the subsidiary is profitable and corporate tax has been paid, dividends can go up to the US LLC. These payments fall under the withholding tax applicable to non-residents.

The domestic rate is 30% for a company. It is reduced by the tax treaty between France and the United States: 15% in principle, 5% if the LLC holds at least 10% of the capital, and 0% if it holds at least 80% of the voting rights for 12 months. This topic deserves its own treatment, because applying the treaty requires gathering specific supporting documents. We have detailed it in our article on the withholding tax on dividends paid to a foreign parent company.

Three configurations recur in our files and call for a specific reading.

The single-member LLC. In the United States, a single-member LLC is often disregarded for tax purposes. That US characterization is not taken as is in France: the body-of-indicators method applies in the same way, and caution remains warranted on the translucent or opaque classification.

The LLC that elected the C-corp regime. If the LLC elected in the United States to be treated as a corporation, the argument for assimilation to a capital company is reinforced. This election is a useful piece of evidence, without mechanically settling the French treatment.

The LLC operating directly, without a subsidiary. This is the scenario of the founder who wants to invoice French clients from Delaware. You then have to examine the existence of a permanent establishment in France, VAT, and the appointment of a tax representative. This path is often heavier than it looks, and it is precisely the comparison that pushes many groups to set up a subsidiary.

We supported a Delaware LLC that wanted to invoice several recurring French clients directly to save time. On review, the planned volume of activity in France and the lasting nature of the client relationship made the direct structure more constraining than expected, notably on VAT. Moving to an SAS subsidiary clarified invoicing, VAT registration and reporting to the parent, without making day-to-day management heavier.

1. Frame the project and the ownership structure of the future subsidiary (who holds what, at what percentage).
2. Choose the suitable French form (SAS or SARL) given governance and shareholders.
3. Incorporate the subsidiary and pay up the capital.
4. Set up the accounting under the general accounting plan and the chart of accounts.
5. Register the subsidiary for VAT and obtain the intra-EU number.
6. Configure the invoicing chain in view of the 2026 reform.
7. Build the adjustment bridge for group reporting under US GAAP.
8. Anticipate the treatment of dividends going up to the LLC.

• Tax characterization of the parent LLC analyzed (C-corp election or not).
• Form of the subsidiary decided (SAS or SARL) and capital defined.
• Forecast built on a 25% corporate tax rate as a precaution.
• VAT arrangements and any need for a tax representative settled.
• General accounting plan bookkeeping organized and group reporting bridge planned.
• Invoicing chain checked against the 2026 reform.
• Dividend distribution strategy anticipated.

• The French subsidiary of a US LLC is a French company subject to corporate income tax and bound by the general accounting plan, regardless of the US treatment of the LLC.
• The standard corporate tax rate is 25%; the reduced 15% rate is in principle out of reach when the subsidiary is held by a legal person such as an LLC.
• The subsidiary registers for VAT on its own; the tax representative mainly concerns the LLC that operates directly without a subsidiary.
• There is a single set of official accounts under the general accounting plan, plus a US GAAP consolidation reporting derived from it.
• The French tax characterization of the LLC is never automatic: it depends on its features and on its US tax election.
• Dividends going up to the LLC fall under a withholding tax, reduced by the France-USA treaty according to ownership thresholds.

To go further, you can read our file on setting up a US company and the LLC, C-corp or subsidiary trade-off, our subsidiary creation guide, and our page dedicated to company creation for US entrepreneurs. Foreign founders will also find an overview in our roadmap to setting up in France.