Hello to all

i am new to this forum,

I plan to form an LLC in the state Delaware
i am a French citizen based in Paris
& i will be the only owner of this llc operating from France with internet.
so, physically i am not on the Usa soil.

questions:

do i have to pay social secutity taxes as a non us resident ?
do i have to pay income tax for any revenue received from my llc?

thank you for your answers

Negev

IntlTax

Another interesting question related to this fact pattern is whether France would consider the US LLC taxable in France. Many countries determine tax residency based on where the company is managed and controlled. If negev is managing the US LLC from France, then France may consider the US LLC to be a resident of France. If this were the case, the LLC may be subject to corporate level tax in France.

negev

A tax treaty exists for France and that is to prevent double taxation
The IRS exempts the foreign person a non us resident for his US source income if he has no physical presence on US soil.
however, Negev will be taxable by The French IRS but only for his personal income from the US as individual and the LLC incorporated in Delaware
will not be subject to any taxation.

IntlTax

I am familiar with the treaty you mention. I am not sure how you believe it applies to you other than my description in post #10 above.

The IRS doesn't make U.S. tax laws. Congress and the President do. Thus, the IRS doesn't exempt anyone from U.S. tax. The U.S. tax law in this area is more complex than you imply.

You indicate that the LLC will not be subject to any taxation. You seem to be quite confident of this, even though you were the original poster asking the question.

negev

i agree on this point: US tax laws are voted by the congress and the President.
yes, i am quite confident even though i were the original poster.
as i have done some research on the internet.
However, LLC will not be subject to any taxation for the following reasons:
1- The LLC is incorporated in Delaware
2- Negev is not Physically in this country
3- business is opeated outside us borders ( on the internet )
Any single member LLC, where that sole member
is a foreign person for U.S. tax purposes (meaning he or she is not a US citizen,
does not have a U.S. green card or who does not reside in the U.S. for more than a month or so each year)
- the LLC is ignored for U.S. and most states income tax purposes.

Accordingly, any income earned is treated as earned directly by the foreign person.
Such income is not subject to U.S. taxation so long as the foreign person did not perform
his services or sales activity in the U.S.

I also Found this:
http://www.irs.gov/pub/irs-pdf/p519.pdf

page 48 it says:

SOCIAL SECURITY AND MEDICARE TAXES

If you work as an employee in the United States,
you must pay social security and Medicare taxes in most cases.

Your payments of these taxes contribute to your coverage under the U.S. social security system.
Social security coverage provides retirement benefits, survivors and disability benefits, and medical insurance
(Medi-care) benefits to individuals who meet certain eligibility requirements.


In general, U.S. social security and Medicare taxes
apply to payments of wages for services performed as an employee in the United States,
regardless of the citizenship or residence of
either the employee or the employer.

IntlTax

Is your Internet business engaged in selling products or selling services?

negev

my Internet business is engaged in selling services eg:digital media such as wav or mp3 files we provide Production music to film, tv, video, multimedia and more

IntlTax

If you are providing services, it does seem likely that you are not subject to U.S. tax.

I am not an expert at French tax law. However, the income tax laws of most countries have many similarities. It would seem to me that if an agent or employee of a US LLC (that is treated as a corporation for French tax purposes) is located in France and is providing services in France in the name of the LLC, it would seem very likely that the LLC would have a permanent establishment in France. As a result, it would seem very likely that the LLC would be taxed at the corporate level by France on the income from those services taking place in France.

IntlTax

For comparison, if an agent or employee of a US corporation is located in France and is providing services in France in the name of the corporation, it would seem very likely that the corporation would have a permanent establishment in France. As a result, it would seem very likely that the corporation would be taxed at the corporate level by France on the income from those services taking place in France. I see no reason why France would tax a US LLC differently.

negev

The LLC incorporated in Delaware USA cannot be taxed By the French tax administration because The LLC is not on French soil
however, the person who is residing in France someone with a physical presence in France is subject to taxes but only on his income.
I presume most countries are acting this way in order to prevent double taxation. that is why treaties were made for

IntlTax

Above you indicate that "[t]he LLC . . . cannot be taxed by the French tax administration because the LLC is not on French soil."

Entities such as LLCs and corporations can only act through their agents and employees. An entity formed in one country with agents or employees in another country can be taxed on income generated in the other country. For instance, an entity formed in the U.S. with agents or employees in France can be taxed on income generated in France.

The U.S.-France Income Tax Treaty takes this circumstance into consideration. See Articles 5 and 7 of the Treaty. Of course, the Treaty would not apply to the LLC because it would not be considered a U.S. resident because it is not liable to tax in the U.S. See Article 4, paragraph 1 of the Treaty.

The more I think about this, the more I am convinced that you have a French tax issue. You will be performing services in France as an agent or employee of the LLC. The LLC will generate income sourced only in France. Thus, France will tax the income of the LLC.

Further, if you take the money out of the LLC and use it for personal expenses or otherwise, France will tax the income to you at the individual level (unless you can claim a credit for the French taxes already paid by the LLC [seems unlikely]).

I recommend that you speak with a French tax advisor that deals with cross-border transactions, and show him these discussions.