Delaware LLC: Annual Tax Due June 1, Then 1.5% Interest per Month

Section 18-1107 of Title 6 leaves no room for doubt. Every domestic limited liability company, and every foreign one registered to do business in Delaware, pays an annual tax of 400 dollars. Each registered series adds another 100 dollars.

The amount is due on the first of June following the end of the calendar year, or when the company is cancelled.

And if it goes unpaid, the tax accrues interest at one and a half percent for every month or part of a month until it is paid in full.

The four hundred dollars apply from tax year 2026, so they are first due on June 1, 2027. For yesterday's payment, tax year 2025, Delaware still charged three hundred dollars. If you are budgeting three hundred for 2026 onwards, update the number.

Unlike a corporation, it files no annual report. It reports no directors, no members and no addresses to the state. It pays its flat tax, and that is it.

That simplicity is exactly why Delaware is so popular for holding companies. There is little to do and little that can go wrong.

And that same simplicity tempts people to forget the company exists. Four hundred dollars is not an amount you notice when it goes missing, and the state does not send you a bill; at most it goes to your Registered Agent.

First, interest starts running. Then the company loses its good standing. After three years without payment, Delaware usually declares it void.

Void does not mean gone. The liabilities remain, the federal tax obligations remain, and if you want to revive the company, you pay every outstanding year plus interest plus a reinstatement fee.

I have seen cases where someone wanted to revive a forgotten company after five years because a contract depended on it, and ended up paying a four-figure sum for a company that never made a single sale.

After two years of advising European founders, the picture is fairly clear.

A good fit: as a holding company that owns stakes and does nothing itself. As a company for investors who know and insist on this state's law. As a vehicle for contracts between several parties who want neutral, mature company law.

A poor fit: as the operating company for a business based somewhere else entirely. If you sell in Florida, store goods in Texas and visit customers in California, Delaware gives you nothing but a second registration.

So the question is never whether Delaware is good. Delaware is excellent. The question is whether it does something for you that another state would not do just as well.

So if you live in Europe and hold an American LLC, settle this question before you form the company, not after your first tax return. The setup without a US permanent establishment, the one most of the marketing revolves around, is covered by our sister site zerotax.llc. For the basics, see Taxation of your US LLC and Tax treatment in your country of residence.

If you are looking for a holding company, you will usually compare Delaware and Wyoming. Here is the sober side-by-side.

Delaware: 400 dollars a year for the LLC, no annual report, a dedicated court for corporate law with decades of case law, and a name every investor and every bank knows.

Wyoming: much lower annual fees, a simple registry, likewise no state income tax, but without the established case law and without the name.

For a family holding company with no investors and little risk of disputes, Wyoming is usually the more sensible choice. For anything where capital, disputes between owners or a sale may come up later, Delaware is worth the money.

What stays the same either way: the company has to be managed, it has deadlines, and it has federal reporting obligations that are completely unaffected by your choice of state.

Check online whether your company is in good standing. Both registries are public, and it takes two minutes.

Check that the payment actually arrived. If you pay through a service provider, their invoice does not mean they paid the state.

Check your payment method with your Registered Agent. Expired cards are the most common reason agent services lapse, and with them, mail from the state gets lost.

And put March 1 and June 1 in your calendar for good, depending on your type of entity. Two dates, one calendar, and this topic is settled forever.

Online, the American LLC has become a promise it cannot keep. You read about anonymity, tax freedom and red-tape-free management.

Anonymity from the public exists in some states. Anonymity from the federal government does not, and from your bank even less so.

Tax freedom only exists if there is genuinely no taxable connection to the United States, and then the immediate question is what your country of residence has to say about it. For someone living in Europe, the interesting tax question is almost never the American one.

It really is easy to run, compared with a typical European limited company. It just has deadlines nobody reminds you of, and filings where a violation can cost five figures.

If you know this and still go ahead, you are doing it right. If you don't, you are setting up a problem that only becomes visible three years later.

In Delaware it is not just the annual tax deadline for LLCs. For corporations that had a high franchise tax the previous year, it is also the due date for the first estimated payment for the current year.

The Delaware Code sets its own schedule for this: forty percent by June 1, twenty percent by September 1, twenty percent by December 1 and the rest by March 1.

This only affects larger companies, but if you have one, you should have all four dates in your calendar, not just the one in March.

One more detail that is regularly overlooked in practice: if you form a company partway through the year, a corporation pays a prorated amount for that year, but an LLC pays the full annual tax, because Delaware does not prorate it. In both cases the obligations start immediately. A company formed in November already has its first deadline the following spring.

First: the entity follows the business, not the other way round. If you form the LLC first and then wonder what to do with it, you have the order backwards.

Second: the state of formation follows the activity. If you work in Florida, you form in Florida, unless there is a concrete reason not to.

Third: an American company is cheap to set up but not free to run. If you don't budget for the running costs, in three years you will have a problem that costs more than everything you saved.

If you would like your existing company reviewed or want to hand off the deadlines, talk to Mount Bonnell Advisors in Austin, Texas.

An American company is a tool, not a status symbol. It is quick to set up, cheap to run and remarkably flexible, as long as you actually run it.

What it is not: a solution to a problem you haven't named yet. If you can't say what your company is supposed to do, which state it will operate in and how the money gets back to you, wait with the formation until you can.

Answering those three questions costs one conversation. Answering them wrong costs years.

Create a single page for every American company you hold. On it: name, state, registration number, formation date, tax ID, Registered Agent with contract term, bank, and the three to five annual deadlines with their dates.

That one page is worth more than any binder. It answers in ten seconds the questions a bank, a buyer, a lawyer or an auditor will ask you, and every January it shows you what's coming up.

If you have several companies, you have several of these pages and one overview of them. That is all the administration a well-run American structure needs.

Do I still need this company?

If yes: deadlines in the calendar, check the Registered Agent, update the payment method. Two hours a year.

If no: dissolve it properly. That means paying fees once, and it ends your obligations in Delaware and, if done cleanly, at the federal level too.

What you shouldn't do is the third option: leave it lying around and hope. While the state gives up after three years, the IRS does not. For unfiled returns and missing reports on transactions with the foreign owner, the statute of limitations doesn't start running as long as nothing has been filed.

How it all fits together is explained in Compliance for your US LLC and Ongoing administration of US companies.

Update: What happened next is covered in Delaware quietly raised its prices, and your LLC now pays $400 a year.

Consultation & implementation

If you'd like to find out what this means for your own situation, the best step is to book a consultation.