US Taxes for Companies: Federal, State and Home Country

A US company with owners in Europe has obligations on three levels: with the IRS in Washington, with the state, and with the tax authorities at home.

If you run a US company from Europe, you are not dealing with one tax authority but with three. The Internal Revenue Service in Washington wants to know what the company earns and who is behind it. The state where it was formed demands its own tax, and the state where it actually operates often wants another. And back home, your tax authority wants to know about your stake in it.

Most of these obligations cost little money, but they come with fixed deadlines and fixed forms. Where it almost always gets expensive is a missing form that doesn't even trigger any tax. What an LLC ultimately costs in tax, with tax rates and worked examples, is covered in our separate guide to how a US LLC is taxed.

1Three levels: who wants something from your US company

The first level is federal. The IRS levies income tax on corporations and on the partners of partnerships, collects reports on foreign owners and requires tax to be withheld on payments to foreigners. Everything runs on one number, the EIN, and every item has its own form with its own deadline.

The second level is the states. Each of the fifty states sets its own taxes. Delaware charges every LLC formed there a fixed annual tax, Texas levies a franchise tax on every company formed there or doing business there, and Florida charges corporate income tax on corporations. On top of that come sales tax, due on sales to customers, and payroll taxes as soon as the company has employees.

The third level is your home country. Most European countries tax their residents on worldwide income and decide under their own law how to classify a US company. What counts as a transparent LLC in the US may be treated differently at home.

Everything here applies to companies that genuinely operate in the US and have a permanent establishment there. If you are looking for an LLC with no business in the US that pays no tax on its profits there, our sister site zerotax.llc is the right place. The technical terms you will meet along the way, from ECI and FDAP to nexus, are explained in the glossary.

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2The key decision: how the IRS classifies your company

Before any forms, there is one question that decides everything else: what does the IRS consider your company to be? The rules are in the Treasury Regulations under § 7701, known in practice as check-the-box. A company formed under state law as a "corporation" or "incorporated" is always a corporation. The Inc. has no choice.

The LLC does. Without an election, a single-member LLC is a disregarded entity: for income tax purposes it does not exist separately from its owner, and its income and expenses belong on the owner's return. An LLC with two or more members is a partnership by default. With Form 8832, the LLC can instead elect to be classified as a corporation. The election can take effect no more than 75 days back and no more than twelve months ahead, and once you change your classification, you generally cannot change it again for the next 60 months.

Your company at home also has a classification as soon as it plays a role in the US. Many European public limited companies are on the list of foreign entities that are always treated as corporations. Private limited companies generally are not. For them, the rule for foreign entities applies: if all members have limited liability, it is a corporation by default.

The classification determines the return, and the return determines the calendar. The table shows how they connect. How the LLC files depending on its structure is covered in the guide to the LLC tax return; how much tax it ultimately pays, with rates and examples, is in the guide to taxation of the US LLC.

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3The number comes first: EIN, ITIN and SSN

You can't get anything done with the IRS without an EIN. The Employer Identification Number is a nine-digit number for companies, and every LLC, corporation and partnership needs one, even without employees. An LLC with a foreign owner applies for one specifically to file Form 5472. The IRS issues the EIN free of charge and warns against websites that charge fees for it.

The hurdle for European owners is the person listed as the responsible party on the application. The IRS only issues an EIN online if that person has an SSN or ITIN and the company has its principal place of business in the US. Everyone else applies by fax or by mail; companies without a principal place of business in the US can also apply by phone. If you have no SSN or ITIN and cannot get one, you enter "foreign" or N/A in that field on Form SS-4. By fax, the EIN usually comes back within four business days; by mail, after about four weeks.

The EIN is not the only US number. The ITIN is the tax number for individuals who cannot get an SSN, and you need it, for example, when you file your own return as a partner in a partnership and want credit for the tax withheld. A separate guide explains which number is meant for what.

Read more: applying for an EIN without an SSN →

Read more: EIN, ITIN, SSN and TIN →

4The corporation: Form 1120 and 21 percent

For the IRS, the corporation is the simplest case, because it is a taxpayer in its own right. It reports its profit on Form 1120 and pays federal tax of 21 percent on it. The deadline is the 15th day of the fourth month after the end of the fiscal year, so April 15 for a calendar year. Form 7004 extends the deadline to file, but not the deadline to pay.

File late and you pay five percent of the unpaid tax for each month or part of a month, up to 25 percent. For returns due in 2026 that are more than 60 days late, the minimum penalty is the smaller of the tax owed and $525. A profitable corporation should know its deadline.

If at least 25 percent of the corporation is owned by a foreign person, such as your company at home or you personally, it is also a reporting corporation. It attaches Form 5472 to its Form 1120, reporting its transactions with related parties: payments to the parent company, loans, licenses, capital contributions. This is the report most often forgotten, and missing it costs $25,000 per year. The guide to how a US corporation is taxed covers its full tax burden.

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5The single-member LLC: Form 5472 and the cover sheet

A single-member LLC is disregarded for income tax purposes. The IRS makes one exception: if the LLC is wholly owned by a foreign person, it has been treated as a corporation for the reporting requirements under § 6038A since tax years beginning in 2017. It therefore files Form 5472 every year, attached to a Form 1120 on which only the LLC's name and address and two items on the first page are completed. Across the top you write "Foreign-owned U.S. DE".

This return does not go to the usual Form 1120 address, but by fax to 855-887-7737 or by mail to a dedicated IRS office in Ogden, Utah. The deadline is that of Form 1120, so April 15 for a calendar year, and it too can be extended with Form 7004.

In this case, the owner pays the tax on the profit personally. If you are an individual without US residence and the LLC runs a business in the US, you report the income on Form 1040-NR. If your company at home is the owner, it reports the income as a foreign corporation on Form 1120-F. In both cases, Form 5472 is filed as well.

The penalty for a missing or substantially incomplete Form 5472 is $25,000 per year. If the filing is still outstanding more than 90 days after the IRS sends a notice, another $25,000 is added for each additional 30-day period or part of one. The same penalty applies if the company fails to keep the required records. Two separate guides explain how to complete the form and what you can do if a penalty notice arrives.

Read more: Form 5472 and pro forma 1120 →

Read more: penalties and late filing →

6The multi-member LLC: Form 1065 and withholding

An LLC with two or more members is treated as a partnership unless it elects otherwise. It pays no federal income tax itself, but it files Form 1065 every year, an information return with a Schedule K-1 for each member. The deadline is the 15th day of the third month after the end of the tax year, so March 15 for a calendar year. File late and you pay $255 for each month or part of a month, up to twelve months, multiplied by the number of members.

Foreign partners face an extra obligation that catches many by surprise. If the partnership carries on a business in the US, every foreign partner is treated as engaged in a US trade or business in their own right. The partnership must withhold and pay over tax on each foreign partner's share of the US profit: 37 percent for individuals and 21 percent for corporations. This Section 1446 withholding is based on the share of profit, not on distributions. Even a partnership that keeps every dollar in the business still has to withhold.

The tax is paid in four installments with Form 8813 and reconciled with Form 8804 for the company and Form 8805 for each foreign member. To do this, the partnership needs a US taxpayer identification number from every foreign member, which for individuals means an SSN or ITIN. The member attaches Form 8805 to their own return and claims a credit for the tax withheld. The guide to Form 1065 shows how it all fits together.

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7What you report personally as a partner

Behind every pass-through LLC there is a personal return. As an individual without US residence, you file Form 1040-NR if you have income connected with a US business, known as effectively connected income. That income is taxed at the regular graduated rates. If you have no US wages subject to withholding, the deadline is the 15th day of the sixth month after year end, so June 15 for a calendar year.

One point is often misrepresented: social security contributions on your share of profit. Under US law, nonresident aliens are not subject to self-employment tax unless a totalization agreement assigns them to the US system. Income tax is not affected by this.

Income not connected with a US business is a different matter, for example dividends your corporation pays to you or to your company at home. The payer withholds a flat 30 percent, unless a tax treaty provides a lower rate. You only get the lower rate if you document your residence: individuals with Form W-8BEN, companies with Form W-8BEN-E. Three separate guides cover the difference between ECI and FDAP, the treaty rates and how to complete both forms.

Read more: US withholding tax, FDAP and ECI →

Read more: W-8BEN-E for companies and LLCs →

Read more: W-8BEN for freelancers and individuals →

8The states: franchise tax and corporate income tax

State tax comes down to two questions: where was the company formed, and where does it do business? The answers can differ. A Delaware LLC that operates in Austin pays its annual tax in Delaware and is registered in Texas as a foreign LLC, where it is subject to the Texas franchise tax.

Delaware charges every LLC, LP and GP formed or registered there an annual tax of $400, due June 1 for the prior year; a law effective January 1, 2026 raised the amount from $300 to $400. Delaware does not require an annual report from an LLC. A corporation, by contrast, files an annual report by March 1 and pays franchise tax, calculated either on the number of authorized shares or on assumed par value capital. Corporations that do business in Delaware itself also pay 8.7 percent corporate income tax there.

Texas levies its franchise tax as a tax on the margin of every taxable entity formed in Texas or doing business there, explicitly including LLCs and partnerships. For the 2026 and 2027 report years, no tax is due on revenue up to $2,650,000. You then don't need the tax report itself, but you do need to file the Public Information Report or the Ownership Information Report every year, both due May 15. Florida taxes corporations and LLCs classified as corporations at 5.5 percent; an LLC treated as a partnership files its own information return there as soon as one of its members is a corporation. The guide to Delaware explains what the state requires in detail and how to calculate a corporation's franchise tax; our page on company formation in Delaware covers the state as a location.

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9Sales tax: when selling into a state creates obligations

The US has no federal VAT. Instead, the states and many local governments levy a sales tax on sales to end customers, each with its own rates, exemptions and returns. For a seller from Europe, the key question is when you have to register in a state, collect the tax and remit it. The technical term for this is nexus.

For a long time this required a physical presence: a warehouse, an office, an employee. Since the Supreme Court's 2018 ruling in South Dakota v. Wayfair, states may also base the obligation on economic presence, meaning your sales to their customers. Texas, for example, requires sellers with no physical presence in the state to register once their sales to Texas customers reach $500,000 over the preceding twelve months. If you sell only through a marketplace that collects and remits the tax for you, you don't need your own permit there, but you must keep records of your sales.

Each state sets its own thresholds. The sales tax guide explains how nexus arises and how registration works; a separate overview lists the thresholds for every state.

Read more: sales tax and nexus →

Read more: sales tax by state →

10Non-tax filings: BE-13 and beneficial ownership reporting

Some obligations have nothing to do with tax, which is exactly why they get overlooked. The most important one for new companies with foreign owners is the BE-13 form from the Bureau of Economic Analysis, the statistics agency of the Department of Commerce. As soon as a foreign person holds 10 percent or more of the voting rights in a US company, because they form or acquire it, the US company must file a BE-13 within 45 days, whether or not the BEA contacts it.

The full forms only apply once costs exceed $40 million. If you stay below that, and almost every small or mid-sized business does, you file the BE-13 Claim for Exemption, a short exemption form. Failing to file can lead to a civil penalty of between $5,911 and $59,114.

Federal beneficial ownership reporting to FinCEN, known as Beneficial Ownership Information, is a different story. Since an interim rule of March 26, 2025, which FinCEN later made final, companies formed in the US are exempt from this filing. Only certain foreign companies registered to do business in a state still have to report. A separate guide covers what the BE-13 and the BEA's later surveys involve.

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11Bookkeeping and records: what the IRS wants to see

US tax law does not prescribe a statutory bookkeeping format of the kind many European countries have. It does, however, require books and records sufficient to prove every return correct. For companies with foreign owners, this obligation is stricter: a reporting corporation, and therefore also an LLC with a foreign owner, must keep records that make its transactions with related parties traceable. If they are missing, the same $25,000 penalty applies as for a missing Form 5472.

In practice, that means a separate bank account for the company, no personal payments through it, a record for every contribution and every withdrawal, and a contract or invoice for every payment to you or your parent company. At year end, these records become Form 1120, Form 1065 or Form 5472, and they are what the company uses to answer any query. The bookkeeping guide explains the LLC's obligations, how long records must be kept and which software works for a company with owners in Europe.

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12When a letter from the IRS arrives

The IRS writes letters, and it sends them to the address it has on file for the company. That is why keeping the address current is one of your obligations: if the address or the responsible party changes, the company reports it on Form 8822-B, and a new responsible party must be reported within 60 days. Move without reporting it and you miss the letters that matter.

Most letters carry an identifier, a CP or Letter number, and a response deadline. Some simply confirm something; others assess tax or a penalty. For most penalties, the law offers relief if the failure was due to a sound reason rather than neglect, known as reasonable cause. You request it in writing, with an explanation and supporting documents. The guide to IRS letters explains how to read a letter, which deadline applies and what a response looks like.

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13The annual calendar

Put all the obligations together and you get a calendar that repeats every year. For a company whose fiscal year is the calendar year, it starts in March with Delaware and the partnerships, continues in April with the corporations and Forms 5472, in May with Texas, and in June with the Delaware Annual Tax and the members' personal returns. An extension only moves the filing date; tax and installments are still due on the original dates.

A few obligations aren't on the calendar because they're triggered by events: the BE-13 within 45 days of formation or acquisition, reporting a new responsible party within 60 days, and sales tax registration once a threshold is crossed. The table sums up the standard case; you'll find the full calendar, with annual reports, Registered Agent and the differences between states, in our dedicated guide.

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14The home side: your country of residence

Next comes the question of how your country of residence classifies the company. An Inc. is a corporation everywhere. With an LLC, each country decides under its own law whether to treat it as a partnership or as a corporation, and that determines whether your share of the profit is exempt at home, credited, or only taxed once it is distributed. Germany, Austria and Switzerland, for example, each have their own rules, and the same goes for your home country: your accountant at home should check your case before the company is set up.

Our guide to tax treatment in your home country explains how your country of residence treats a US company. And if you want to work out the structure between your company at home and its US subsidiary together with your accountant, the Tax Strategy is the right step before you form the company.

In short

• A US company has obligations with the IRS, in its state and in its owners' home country. Which ones depends first on how the IRS classifies it: corporation, disregarded entity or partnership.
• A corporation reports its profit on Form 1120 and pays 21 percent federal tax. An LLC with one foreign owner files Form 5472 with a pro forma Form 1120 cover sheet; missing it costs $25,000 per year.
• A multi-member LLC files Form 1065 and withholds 37 or 21 percent on its foreign members' share of US profit, even if it distributes nothing.
• On top of that come state taxes, such as the $400 Annual Tax in Delaware or the franchise tax in Texas, sales tax, and filings with no tax attached, such as the BE-13.

Frequently asked questions

Which tax return does a US LLC with foreign owners file?

That depends on its classification. An LLC with two or more members is a partnership by default and files Form 1065. An LLC with one foreign owner is not separate from its owner for income tax purposes, but it files Form 5472 with a pro forma Form 1120 cover sheet. If the LLC has elected corporate classification on Form 8832, it reports its profit like a corporation on Form 1120.

Do I need an EIN for my US company if I don't have an SSN?

Yes. Every LLC, corporation and partnership needs an EIN, and an LLC with one foreign owner needs it just to file Form 5472. Without an SSN or ITIN you can't apply online; you apply by fax, by mail or, if the company has no principal place of business in the US, by phone. There's no fee.

Does the LLC have to withhold tax if it doesn't distribute any profit?

Yes, if it's a partnership with foreign partners doing business in the US. Withholding under § 1446 is based on the US profit allocable to the foreign partners, regardless of distributions: 37 percent for individuals, 21 percent for corporations.

As a member with no US residence, do I pay social security tax on my LLC profit?

Under US law, generally not. Nonresident aliens are not subject to self-employment tax unless a social security agreement assigns them to the US system. This has no effect on US income tax.

How much tax does a Delaware LLC pay each year?

The Annual Tax for a Delaware LLC is $400 a year, due June 1 for the previous year. Delaware doesn't require an annual report from an LLC. Pay late and you owe an extra $200 plus 1.5 percent interest per month.

How we help you

• US Tax ConsultationYour US tax question, answered by people who know both sides.
• Apply for an EINWe apply for your company's US tax ID for you.
• Corporation tax returnForm 1120 and Form 5472 for your US corporation.
• LLC and LP Tax ReturnForm 1065 and K-1 for your LLC or LP.
• Sales taxRegistration and returns in the states where you have nexus.
• Withholding taxW-8 forms, withholding and treaty benefits, done right.