It almost always starts the same way. There are duties in the US, and nobody is clearly responsible for them. Your adviser at home knows your national tax law. A US accountant knows US law, and rarely cares what follows from it in Germany, France or the UK. If you are taxed in two countries, you sit between the two.
That gap is where we work. We prepare your US returns ourselves, in-house, from the books to the signature page. Before anything goes in on either side, we agree the figures with your adviser at home, so the same number appears in both countries with a derivation that stands up to a question.
You explain your situation once, in plain English, and you do not have to translate it between two legal systems yourself.
Federal and state tax, the filing calendar, bookkeeping, payroll and sales tax for your US company.
Company tax →When you move with the business, the IRS starts counting days. Residence, the first year and the last year.
Your personal tax →How the treaty between your country and the US decides residence, business profits, withholding and relief.
Tax treaties →Federal tax. A US corporation pays federal income tax at a flat 21 percent of its taxable income. It files Form 1120 every year, whether or not it has taxable income. A dormant company is rarely a company with nothing to file.
The LLC depends on how it is classified. By default, an LLC with two or more members is taxed as a partnership: it files Form 1065 and each member is taxed on their share. A single-member LLC is disregarded by default and its income sits on the owner's return. Either can elect to be taxed as a corporation on Form 8832. Which classification suits you depends as much on your home country as on the US, so we decide it together with your adviser at home.
Owned from abroad. A US corporation that is at least 25 percent foreign-owned, and a single-member LLC owned from abroad, report their dealings with the foreign owner on Form 5472. For the LLC, that means a pro forma Form 1120 with Form 5472 attached, every year. The penalty for not filing it, or for not keeping the records behind it, is $25,000. It is an information return, so the penalty applies even in a year without a dollar of profit.
State taxes. Each state sets its own business taxes. Texas, for example, levies a franchise tax, a privilege tax on every taxable entity formed in Texas or doing business there. An entity from outside Texas with gross receipts of $500,000 or more from business in Texas has economic nexus for that tax even without a physical presence. Other states have their own corporate taxes. And some states do not follow the provisions of US tax treaties at all.
If a due date falls on a weekend or legal holiday, it moves to the next business day. An extension gives you more time to file, not to pay: interest runs on tax paid late even when an extension is granted.
| Return | Who files it | Due | Extension |
|---|---|---|---|
| Form 1065 | LLC with two or more members, limited partnership | 15th day of the 3rd month: March 15 (for tax year 2025: March 16, 2026) | Six months with Form 7004 |
| Form 1120 | Corporation, or an LLC taxed as one | 15th day of the 4th month: April 15 | Six months with Form 7004 |
| Pro forma Form 1120 with Form 5472 | Single-member LLC owned from abroad | Same as Form 1120: April 15 | Six months with Form 7004 |
| Forms 1042 and 1042-S | A US company paying US-source income such as interest, royalties or dividends to foreign persons | March 15 | Form 7004 for Form 1042 |
| Form 941 | Employers | Last day of the month after each quarter | None |
| Form W-2 to employees | Employers | End of January (for 2025: February 2, 2026) | None |
IRS Instructions for Forms 1120, 1065, 5472 and 1042; IRS Publication 509 (2026). Read 25 October 2026.
Each month or each quarter you send us your bank statements and receipts, and we book them. Where you have staff, payroll runs in the same rhythm. By the time a return is due, the numbers are already there.
It also works for a company someone else started for you years ago and nobody has looked after since. That is common, and it is nothing to be embarrassed about. We take stock first, which years are open and which forms are missing, then we catch up year by year, and where the conditions are met we ask the IRS to waive the penalties. Because the harshest US penalties attach to a missing report rather than to tax underpaid, this is worth doing sooner rather than later.
Less than most people expect.
The point that surprises people most: one person working for you from home in Texas creates withholding and reporting duties, long before anyone thinks of opening an office. Payroll needs an EIN, a registration as an employer, and then a fixed rhythm, weekly, every two weeks or monthly.
From each paycheck the employer withholds federal income tax, Social Security and Medicare, and adds its own matching share of Social Security and Medicare. On top come federal unemployment tax, which the employer pays, and the state's unemployment tax and any state and local taxes, which follow where the employee works. Each quarter the employer reports on Form 941, and after year end every employee receives a Form W-2.
We set up payroll, run it, prepare the payslips and the payments to each authority, and handle new hires and leavers.
Sources: IRS Topic no. 751 and Topic no. 759 (both updated 24 September 2026). Read 25 October 2026.
The US has no VAT. Sales tax is a tax of the states, often topped up by counties and cities, on sales to the end customer. The seller charges it, collects it and pays it over to the state. So the question is not where you are from, but whether your business has nexus in a state.
Nexus can come from physical presence: an office, staff or inventory in the state. Since the Supreme Court decided South Dakota v. Wayfair on June 21, 2018, it can also come from sales alone. The Court overruled the old physical presence rule, and states have tied the duty to sales thresholds since. Texas, for example, requires a remote seller whose Texas revenue reaches $500,000 in the preceding twelve calendar months to obtain a permit and collect. Every state sets its own threshold and its own rules about which sales count.
You register with each state separately, and each state decides how often you file: monthly, quarterly or annually. Before you register anywhere, we check where you actually cross a threshold. We work with a specialist US sales tax provider on the registrations and the returns, and you deal with one contact: us.
We contact you before each of these dates, so you do not have to remember to remind us.
You send statements and receipts, we book them. Payroll runs and payroll taxes are paid in the same rhythm.
Year-end statements for the past year go out to the people you paid, Form W-2 to employees among them.
Partnership returns on Form 1065, and Forms 1042 and 1042-S if the company paid US-source income to people or companies abroad.
Corporation returns on Form 1120, and the pro forma Form 1120 with Form 5472 for a single-member LLC owned from abroad.
Sales tax returns in the rhythm each state has set for you.
An extension, if documents are missing. It is common in the US and no black mark, but it moves the filing date, not the date the tax is due.
We do not replace the adviser you already trust. We take over the US side completely and agree the figures with them before anything goes in on either side.
That sounds obvious and often is not done. A tax treaty does not stop you from having to file in both countries. It decides which country may tax what, and how the other relieves the burden. For that to work, both returns have to be filed and the numbers have to fit together. It breaks down when two advisers in two countries never speak. Our part is unspectacular and carries everything: the same number on both sides of the Atlantic, at the right time.
For US income tax, what matters is not your citizenship but whether you are a US resident. As a European citizen you become one in one of two ways: you hold a green card, or you meet the substantial presence test.
The substantial presence test counts days. You meet it for a calendar year if you were physically present in the US on at least 31 days that year, and on at least 183 days over three years, counting every day of the current year, one third of the days of the year before and one sixth of the days of the year before that. Any part of a day counts as a day. Some days do not count, among them days in transit for less than 24 hours and days as an exempt individual, for example as a student on an F or J visa.
Once you are a resident, the US taxes your worldwide income, at the same graduated rates as a US citizen, on Form 1040. As a nonresident you are taxed only on US income, on Form 1040-NR: income connected with a US business at the graduated rates, and other US income such as dividends generally at a flat 30 percent or the lower treaty rate.
The IRS's own example: someone who spends 120 days in the US in each of three years.
| Year | Days in the US | Counted as | Days counted |
|---|---|---|---|
| 2025 (current year) | 120 | All days | 120 |
| 2024 | 120 | One third | 40 |
| 2023 | 120 | One sixth | 20 |
| Total | 180: below 183, so not a resident for 2025 |
IRS, Substantial presence test (page updated 14 March 2026). Read 25 October 2026.
The year you arrive. Under the substantial presence test, your residency generally starts on the first day you are in the US in the year you meet the test. Before that day you were a nonresident. That makes the year of arrival a dual-status year: worldwide income for the resident part, only US income for the nonresident part. If you are a resident on December 31, you file Form 1040 marked "Dual-Status Return", with a statement for the nonresident part. In a dual-status year you cannot take the standard deduction, and you cannot file jointly unless you are married to a US citizen or resident and elect to.
If you arrive late in the year. If you do not meet the test in the year you arrive but will meet it the next year, the first-year choice may let you be treated as a resident from an earlier date. You need at least 31 days in a row in the US, and presence on at least 75 percent of the days from the start of that period to December 31. You can only make the choice once you have met the test for the following year, so the return is often filed on extension.
The year you leave. Residency under the substantial presence test generally ends on December 31 of the year you leave. It can end on your last day in the US if, for the rest of that year, your tax home is abroad and you have a closer connection to that country, and you are not a US resident the following year. You establish that with a signed statement to the IRS. Green card holders stay residents for tax purposes until the green card is formally surrendered or revoked, and long-term green card holders face special expatriation rules. Plan the last year a year ahead, not three weeks ahead.
Even if the three-year count puts you over the line, you can be treated as a nonresident if you were in the US on fewer than 183 days in the current year, kept your tax home in another country all year, and had a closer connection to that country than to the US. You claim it on Form 8840, attached to your return.
The IRS looks at where your life actually is: your permanent home, your family, your belongings, your business activities, where you hold a driver's license, where you vote, and which country you name as yours on official forms. If you spend 183 days or more in the US in the current year, the closer connection exception is closed; the tie-breaker in your country's tax treaty may still help.
The US has income tax treaties with most European countries. Under them, residents of the treaty country pay a reduced rate, or no US tax at all, on certain kinds of US income, and the same works in reverse for US residents. The rates and exemptions differ from treaty to treaty and from one kind of income to the next.
Three things to know before anything else. First, a treaty does not spare you a single return. It decides who may tax what and how the other country gives relief, and it only works if both sides have been filed and fit together. Second, most treaties contain a saving clause: the US keeps the right to tax its own citizens and residents as if the treaty did not exist, with specific exceptions. Third, some US states do not follow treaty provisions, so a treaty can settle the federal question and leave the state question open.
When both countries treat you as a resident under their own law, the residence article of the treaty picks one. In the treaty with Germany, for example, the questions come in this order, and you stop at the first one that gives an answer.
Where do you have a permanent home available to you?
If you have one in both countries: where are your personal and economic relations closer?
If that cannot be determined, or you have a permanent home in neither: where do you habitually live?
If you live habitually in both or in neither: of which country are you a national?
If you are a national of both or neither, the two tax authorities settle it between them.
If the treaty makes you a resident of your European country, you are treated as a nonresident when your US tax is computed. You file Form 1040-NR and attach Form 8833 to disclose the treaty position. For other purposes you remain a US resident. For a long-term green card holder, claiming treaty residence abroad can trigger the US expatriation tax, so that step is never a formality.
Under the business profits article, the profits of a company from your country are taxable in the US only if it carries on business there through a permanent establishment, and then only the profits attributable to it.
A permanent establishment is a fixed place of business through which the business is carried on: a place of management, a branch, an office, a factory, a workshop. Under the treaty with Germany, a building site or installation project counts only if it lasts more than twelve months. Some activities do not create one on their own, such as a facility used only to store, display or deliver goods, or a place used only for purchasing or gathering information.
People can create one too. A person who habitually signs contracts in the name of your company in the US can make it a permanent establishment, even without an office. An independent agent acting in the ordinary course of their own business generally does not. A US subsidiary is a separate taxpayer with its own returns. These are treaty rules; state nexus for sales tax or franchise tax is a separate test.
Most kinds of US-source income paid to a foreign person are subject to 30 percent US tax, withheld by the payer. A treaty can reduce that rate or remove it. The rate depends on your treaty, the kind of income and conditions such as the share you hold and the treaty's limitation on benefits article.
| When | What happens |
|---|---|
| Before the first payment | You give the payer Form W-8BEN (as a person) or Form W-8BEN-E (as a company), with the treaty article and rate you claim. It goes to the payer, not to the IRS. |
| At payment | The payer withholds at the treaty rate shown on a valid form. Without one, it may have to withhold 30 percent. |
| Afterwards | The form generally stays valid until the end of the third calendar year after you sign it, unless something on it changes. |
| If your US company pays abroad | It is the withholding agent. It withholds where required and reports on Forms 1042 and 1042-S by March 15, even if the treaty rate was zero. |
IRS, NRA withholding (updated 14 March 2026); Instructions for Form W-8BEN; Instructions for Form 1042. Read 25 October 2026.
Where both countries may tax the same income, the treaty's relief article says how the country of residence gives relief, by a credit for the other country's tax or by exempting the income. Each treaty, and each home country, does this in its own way.
On the US side, the tool is the foreign tax credit. If you pay foreign income tax on income the US also taxes, you can take it either as a credit against your US tax or as an itemized deduction, and in most cases the credit is worth more. You cannot take a credit for tax on income you have excluded under the foreign earned income exclusion. The choice reaches beyond a single return, so we make it with you and, where it matters, with your adviser at home, never in passing while filling in a form.
As listed on the IRS's A to Z page of US income tax treaties. Check the treaty text and its protocols for your own case.
| Status | Countries |
|---|---|
| Treaty on the IRS list: EU | Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden |
| Treaty on the IRS list: outside the EU | United Kingdom, Switzerland, Norway, Iceland |
| Treaty terminated | Hungary: termination effective January 8, 2023; no longer applies to tax withheld from January 1, 2024, or to other taxes for periods beginning on or after that date |
| No treaty on the IRS list | Croatia, Liechtenstein |
IRS, United States income tax treaties, A to Z (updated 3 January 2026); IRS, Hungary tax treaty documents (updated 10 January 2026). Read 25 October 2026.
Your company's return, or your own as a founder who moved to the US or earns US income. Tell us what you need and we reply with a quote.
Request a quote →Usually yes. A US corporation files Form 1120 every year whether or not it has taxable income, and a single-member LLC owned from abroad files a pro forma Form 1120 with Form 5472. The penalty for a missing Form 5472 is $25,000.
Yes. A treaty decides which country may tax and how double taxation is relieved. It does not replace the return in either country.
Not automatically. With 120 days in each of three years, the substantial presence test gives 180 days, below the 183 that make you a resident. Spend more, and it tips. We do the count with you before the year, not after.
Once you are a US resident, the US taxes your worldwide income, and if your accounts outside the US together exceed $10,000 at any time in the year, you also file an FBAR with FinCEN. Your accounts stay where they are; the reporting changes.
Please do. We take over the US side and agree the figures with them, so both returns tell the same story.
Not all of them. The IRS itself points out that some states do not honor treaty provisions, so the state side needs its own look.
What your company does in the US, where you live, and what has been filed so far. We tell you what is due, and when.
Mount Bonnell Advisors, Austin
+1 512 647 1128Our office in Austin, TexasFree potential analysisIs your US plan one for us? A short written view