# Managing an American Company from France



## uncaged (Jan 2, 2021)

Hello. As an American living in France, suppose that I were to own a French company that sells a service through a website to E.U. companies, and that I were to also own a U.S. company that sells that service through that same or a different website to companies outside of the E.U. I understand that the French company must pay French business tax, and that I must pay French personal tax on any salary and dividends I receive from my French company. I understand that I must pay U.S. taxes on the profits of my U.S. company, and technically all worldwide earnings if it weren’t for the fact that France has higher taxes than the U.S. My concern is that I would be running my U.S. company from France. What I need to understand is if there is any kind of reporting I would need to do or taxes I would be required to pay to France regarding my U.S. company or the salary and dividends I receive from it. Would that be the case, and if so, would that be avoided if the U.S. company payed the French company for my time? Thanks.


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## Bevdeforges (Nov 16, 2007)

If you are "running" the US company from France, then you are working in France and need to be paying into the French tax and social insurance system. Where your company is incorporated or where the customers are located is completely irrelevant here.

That said, there are a number of options for you. If you don't want to combine the US and the French companies in a single French company what you could do is to have the US company pay you a salary, which would then be subject to French taxes and social insurances. (Again, there are a couple different options how to do this - including having the US company register as a French employer with no French presence so it would be the company paying you, and making the appropriate tax and social insurance payments for France.) And, depending on how you set things up, there is usually an option with a French business of having the business pay its own taxes or running the results of the business through your personal tax declarations - although you still need to be signed up for the social insurances ("cotisations") and pay those separately.

Technically speaking, you are supposed to report your worldwide income to both the IRS and the French Fisc, invoking the appropriate credits or deductions on each side designed to avoid double taxation. You don't get to choose which country you pay your taxes to - and generally speaking, you'll probably wind up paying the higher of the two taxes (net) once everything is handled properly. On the US side of the tax issue, you declare everything (both US and French source incomes) and then for the most part you take the Foreign Tax Credit for the taxes paid in France. This is where it could be advantageous to you to become an employee of the US company because then your salary is eligible for the Foreign Earned Income Exclusion (as is your income from the French business) up to the FEIE limit.

You may want to consult with your local CCI (Chambre de Commerce et d'Industrie) and/or possibly look into the US expat group AARO, which offers lots of tax information for its members as well as contacts with many of the tax attorneys in Paris who have experience dealing with these "international" types of situations.


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## Peasant (Aug 12, 2018)

Two companies? Find an accountant (or two) and a lawyer (or two).


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