The Three Levels of US Taxation
In France, corporate tax is levied nationally. In the US, a company can owe tax at three levels at the same time, to three different authorities, on three different sets of rules.
Federal. Levied by the IRS and applied uniformly across the entire country. This is the layer that most closely resembles the French system.
State. Each of the fifty states sets its own corporate tax rules and rates. A company owes state tax in every state where it has established a sufficient connection — a concept called nexus, explained later in this guide.
Local. Cities and counties can levy taxes of their own on top of federal and state.
The state and local layers together are known as SALT — State and Local Taxes. Each layer is independent: you can owe state tax in a state where you owe no local tax, and you file separately at every level. The sections below follow this structure — federal first, then state and local, then the taxes that sit alongside them.
Level One: The Federal Corporate Income Tax
The first tax to understand is the federal corporate income tax, levied by the IRS on taxable income.
Most French scale-ups choose the C-Corp structure for their US expansion, and most incorporate in Delaware. The C-Corp structure creates a clean legal and tax separation between the US subsidiary and the French parent — which matters both for liability and for the bilateral tax treaty.
The federal corporate tax rate is a flat 21% on taxable net income. That rate applies uniformly across the entire country, regardless of which state you operate in.
For federal corporate tax compliance and US filings, see Orbiss’s corporate tax services.
Estimated Tax Payments
US corporations do not settle their entire annual corporate income tax at year-end. If a corporation expects to owe tax, it must make quarterly estimated tax payments to the IRS. For calendar-year C-Corporations, the federal quarterly deadlines are April 15, June 15, September 15, and December 15. Most states require their own estimated payment schedules on similar timelines. Missing or underpaying these installments results in an underpayment penalty and interest.
Levels Two and Three: State and Local Taxes (SALT)
State Corporate Income Tax
In addition to federal tax, nearly every US state levies its own corporate income tax, with rates ranging roughly from 0% to over 9%.
The Franchise Tax
Many states, including Delaware, charge a Franchise Tax on corporations registered there. This is not a tax on franchise businesses; it is an annual fee for the right to maintain your legal corporate status in that state.
In Delaware, this tax and its accompanying annual report are due by March 1 each year. Missing the deadline affects your company’s good standing, which can block fundraising, contract signings, and certain banking transactions.
Local Taxes
Some cities and counties levy their own business taxes on top of federal and state — New York City has its own corporate tax, and San Francisco charges a gross receipts tax. These are separate filings with separate deadlines, so your city of operation matters as much as your state.
Sales Tax: Not a VAT
French companies often expect to find a VAT equivalent in the US. There is none at the federal level. Instead, each US state administers its own Sales Tax — collected from the end customer at the point of sale and remitted to the state. Rates, rules, and exemptions vary significantly across thousands of local tax jurisdictions.
Understanding Nexus
You are only required to collect and remit sales tax in a state where you establish nexus — a sufficient operational connection to that jurisdiction.
Historically, this required a physical presence, such as employees, offices, warehouses, or inventory located within the state. However, states are now legally permitted to enforce an economic nexus standard based purely on sales volume and/or transaction count.
While a baseline standard across many states has traditionally been $100,000 in annual revenue or 200 separate transactions, the regulatory landscape is actively shifting. A growing number of states are eliminating transaction-count thresholds entirely, making a flat revenue metric the expanding standard. For a fast-growing company selling across multiple states, tracking these evolving thresholds is critical to avoiding retroactive tax liabilities, interest, and penalties.
SaaS and Digital Services
Sales tax treatment of software and digital services varies considerably by state. Some states tax SaaS; others exempt it. You'll need to map your product to each state’s specific rules before you start selling there.
Payroll Taxes and Remote Employee Risks
The structure of employment costs in the US differs significantly from France.
Federal Payroll Taxes
Every US employer pays:
FICA (Federal Insurance Contributions Act): funds Social Security and Medicare. The employer’s share is 7.65% of eligible wages — 6.2% for Social Security up to the annual statutory wage base, and 1.45% for Medicare with no cap.
FUTA (Federal Unemployment Tax Act): funds federal unemployment benefits. The gross rate is 6% on the first $7,000 of each employee’s wages. A credit of up to 5.4% applies when state unemployment taxes are paid on time, which reduces the effective rate to 0.6% for most employers.
Each state also levies its own State Unemployment Insurance (SUI) tax, at rates that vary by state and by your company’s claims history.
Remote Employee Exposure
If even one employee works remotely from a state where your company has no physical presence, that state may treat your company as having payroll and corporate tax nexus. Each new state of residence adds a separate registration and reporting obligation. For a fast-scaling team, remote hiring is a live compliance risk that must be monitored.
Accounting Standards: Why They Affect Your US Tax Bill
Your US tax calculation starts with your book income. The taxable result is calculated from your financial statements, then adjusted for US tax rules. So the accounting framework you use sets the starting point of everything above.
Three frameworks can be in play at the same time:
PCG (Plan Comptable Général) governs the statutory accounts of every French legal entity. Your French parent company always keeps PCG books.
IFRS (International Financial Reporting Standards) is mandatory for the consolidated accounts of EU-listed groups. Individual French entity accounts remain in PCG even when the group consolidates in IFRS.
US GAAP (Generally Accepted Accounting Principles) is required for companies registered with the SEC and expected by US banks, venture capital funds, and private equity investors. It is the default framework for US subsidiaries of privately held French scale-ups raising capital in the US market.
These frameworks time revenues and expenses differently. The same transaction can land in your accounts at different moments depending on which one you apply — which changes when profit appears, and therefore when US tax falls due.
The French statutory ledger remains a separate obligation, covered by Impulsa’s accounting expertise.
Cross-Border Obligations: Disclosure, Treaty, and Transfer Pricing
Form 5472: The Foreign Ownership Disclosure
Any US corporation owned at least 25% by foreign shareholders must file Form 5472 together with Form 1120 (the standard federal corporate tax return) with the IRS each year to disclose related-party transactions, such as intercompany loans, management fees, and licensing arrangements.
The penalty for failing to file, or for filing incorrectly or incompletely, is a minimum of $25,000 per missing form — regardless of whether the company reported a profit. This is one of the most common and costly compliance gaps for foreign-owned subsidiaries.
The France-US Tax Treaty
France and the United States share a comprehensive bilateral tax treaty designed to prevent double taxation.
Repatriating Profits
When the US subsidiary pays dividends to its French parent, the treaty can reduce the standard 30% US withholding tax rate. The reduced rate is 5% for a parent holding at least 10% of the subsidiary’s voting shares, and can reach 0% under specific conditions for parent companies holding at least 80%. The applicable rate depends on your ownership structure and the treaty article applied.
Transfer Pricing
Any transaction between the US subsidiary and the French parent — management fees, shared services, IP licensing, intercompany loans — must be priced at arm’s length under OECD guidelines. Both the IRS and France’s DGFiP (Direction Générale des Finances Publiques) scrutinize these transactions closely. Inadequate documentation exposes the company to tax adjustments and penalties on either side of the Atlantic.
Three levels of tax, fifty state systems, and separate rules at every layer: US tax complexity is real, and no French finance team should have to learn it alone. Orbiss guides French scale-ups through all three levels — federal, state, and local — from initial structuring through ongoing tax compliance, payroll setup, and financial reporting. With Impulsa on the French side, both halves of your expansion are covered by teams that already work together. Contact Orbiss and Impulsa to review your expansion strategy.
