Table of Contents
▼
What does a non-US resident actually owe on a Delaware LLC?
For most non-US founders, the only unavoidable yearly bill is Delaware's $400 flat LLC tax. Federal income tax is $0 until the LLC earns income from a US trade or business. That short answer holds for most founders selling software, services or products from outside the US through a Delaware LLC.
Quick Answer: A Delaware LLC owned by a non-US resident pays a flat $400 annual tax to the State of Delaware, due June 1. Delaware LLCs file no annual report. On the federal side, the LLC is a pass-through: you owe US tax only on US trade or business income (ECI) or US-source passive income. A foreign-owned single-member LLC still files Form 5472 with a pro forma Form 1120 every year, even with zero income.
Three layers of cost exist, and founders mix them up constantly:
- State: the $400 Alternative Entity Tax. Flat. Same for a one-person LLC and a fifty-member LLC [4].
- Federal: nothing on foreign-source income. Tax applies to ECI and to fixed, determinable US-source income (FDAP), which is withheld at 30% unless a treaty lowers it.
- Provider: registered agent, mail forwarding, formation filing. These are private fees, not taxes.
Delaware does not tax non-residents on income earned outside Delaware. Delaware-source income is a different animal. Own a rental property in Wilmington and you have Delaware filing exposure. Run a SaaS company from Bengaluru and you do not.
One structural point decides your federal paperwork. A single-member LLC is a disregarded entity: the IRS ignores it and looks at you. A multi-member LLC files Form 1065 and hands each member a K-1. Pick your ownership structure knowing that.
Say your LLC has two Indian co-founders and no US customers. You file Form 1065 and two K-1s, not a 1040-NR, and you still owe Delaware $400 on June 1.
Delaware franchise tax and annual report: what does an LLC actually file?
A Delaware LLC pays the $400 yearly tax by June 1 and files no annual report. That second half is where most blog posts get it wrong. The Division of Corporations states it plainly: LLCs, LPs and GPs are not required to file annual franchise tax reports, they must pay the $400 yearly tax on or before June 1 [4].
Why the "franchise tax" label confuses people
Delaware calls it the Alternative Entity Tax. Founders call it franchise tax. For corporations, Delaware franchise tax is calculated on authorized shares or assumed par value, and corporations do file an annual report by March 1. None of that applies to your LLC. If a guide tells you to file a Delaware annual report by March 1, that guide is describing a corporation.
How to pay
Pay online through the Division of Corporations eCorp portal. ACH debit is required for transactions over $5,000, which will not touch a standard $400 payment. Keep the confirmation. It is your only receipt if a dispute appears two years later.
Heads-up: mark June 1 in your calendar in January, not May. Founders in Asia and Europe miss it because the deadline falls in the middle of their week and nothing in their inbox reminds them.
The registered agent is not optional
Delaware requires a registered agent, a person or company with a physical Delaware street address that accepts legal service on your behalf. Lose the agent and you lose good standing, which blocks banking, contracts and any future financing. Budget for it as a recurring cost, not a one-time formation expense.
If you are still choosing where to incorporate, US LLC formation for non-residents covers the filing mechanics and registered agent setup.
Federal taxes for a foreign-owned Delaware LLC: when does the US actually tax you?
The US taxes you on two things: income effectively connected with a US trade or business (ECI), and US-source passive income (FDAP) at 30% unless a treaty reduces it. Everything else, meaning income from customers outside the US earned by a business run outside the US, sits outside the federal net.
What creates a US trade or business
A US bank account does not. A Delaware address does not. A registered agent does not. Those are administrative contacts, and treating them as a US trade or business is the single most common error I see in founder questions.
What does count: employees or dependent agents in the US who regularly negotiate or close contracts on your behalf, a US office or fixed place of business, and services physically performed in the US. Treaties add the permanent establishment test. Under most US treaties, including the India-US treaty, a business profits article shields you from US tax unless you have a permanent establishment in the US. Read your country's treaty article, not a blog summary.
Form 1040-NR
If you have ECI, you file Form 1040-NR, the non-resident individual return. The due date is April 15. Non-residents whose tax home and abode are outside the US get an automatic extension to June 15, and that extension covers the return, not the payment.
Form 5472 and the pro forma 1120
This is the filing that bites. A foreign-owned single-member LLC must file Form 5472 with a pro forma Form 1120 every year, including years with no income and no US activity, because reportable transactions with the foreign owner are assumed. The penalty for failure to file is $25,000 per return.
That number is not a typo. A founder who ignores the filing for three years faces a six-figure assessment on an LLC that never earned a dollar.
W-8BEN
Give Form W-8BEN to US payers: Stripe, marketplaces, US clients. It certifies your foreign status and lets you claim treaty benefits so the payer withholds at the treaty rate instead of 30%. It has no fixed expiry date, but it becomes unreliable when your address, treaty claim or ownership changes. Refresh it then.
Suppose you invoice a US client from Pune. You send a W-8BEN, the client withholds nothing under the treaty, and no US trade or business exists because you never set foot in the US. That is a clean, common, defensible setup.
For the filing walkthrough itself, see federal tax support for Form 5472 and Form 1120.
Delaware vs Wyoming for non-US founders: which state costs less to keep compliant?
Wyoming costs less each year. Delaware wins on investor familiarity. That is the honest tradeoff, and the fee difference is real: Wyoming's minimum annual report license tax is $60, against Delaware's $400.
| Item | Delaware LLC | Wyoming LLC |
|---|---|---|
| Annual state fee | $400 flat | $60 minimum |
| Annual report required | No | Yes (annual report/license tax) |
| Deadline | June 1 | First day of anniversary month |
| State income tax on non-resident's out-of-state income | None | None |
| Late penalty | $200 plus 1.5% monthly interest | Check the current official schedule |
| Registered agent | Required | Required |
| Investor familiarity | High | Lower |
Keep government fees separate from provider fees in your head. Delaware's formation fee and Wyoming's formation fee are state charges. The registered agent runs roughly $50 to $300 a year depending on provider, and that is a private contract, not a tax.
On late penalties, Delaware adds a $200 penalty plus 1.5% monthly interest on unpaid LLC tax.
My call: if you plan to raise venture capital from US funds, form in Delaware and pay the $400 without complaint. Investors, lawyers and acquirers expect Delaware, and a Wyoming conversion later costs more than the fee difference ever saves. If you are a solo consultant with no funding plans, Wyoming's $60 is the better deal, provided you never miss the anniversary-month deadline.
What is the annual compliance calendar for a Delaware LLC owned by a non-US resident?
Your year has four fixed points: June 1 for Delaware, April 15 for federal, June 15 for the extended federal deadline, and a December review. Everything else is bookkeeping.
| Month | Action |
|---|---|
| January | Collect W-8BENs, review whether any activity created a US trade or business |
| March | Close the books, separate US-source from foreign-source income |
| April 15 | File Form 1040-NR and Form 5472 with pro forma 1120 |
| June 1 | Pay Delaware's $400 tax online |
| June 15 | Extended federal deadline for non-residents abroad |
| December | Year-end review, confirm registered agent is active and paid |
Delaware has no March 1 deadline for LLCs because there is no annual report. Ignore any calendar that tells you otherwise.
Imagine it is April 10 and your bookkeeper has not sent the year-end numbers. You can still file an extension and pay an estimate by April 15. What you cannot do is skip Form 5472, because the extension covers the return and the penalty clock keeps running.
What happens if you miss a Delaware or federal deadline?
Delaware charges a $200 penalty plus 1.5% monthly interest on the unpaid $400. The IRS charges failure-to-file and failure-to-pay penalties, and a $25,000 penalty for a missing Form 5472. Neither is negotiable at the counter.
Delaware's escalation is slow and then sudden. Miss June 1 and you owe a bit more. Miss it for a couple of years and the LLC can be voided for non-payment, which means reinstatement, back taxes, penalties and a gap in your corporate history that banks and payment processors will ask about. A lapsed registered agent triggers a similar path.
Federal relief exists. Reasonable cause relief is real but narrow, and "I did not know" does not qualify. If you have a delinquent Form 5472, file it now with a statement explaining the failure and get a professional involved before the IRS writes to you.
Suppose you discover in August that you never filed Form 5472 for last year. File it immediately, pay Delaware if you owe it, and document everything. Voluntary correction is always cheaper than a notice.
How do you stay compliant year after year as a non-US owner?
Build a routine, not a rescue. Four habits cover almost every non-US founder: keep the registered agent paid, pay the $400 by June 1, keep books that separate US-source from foreign-source income, and file Form 1040-NR and Form 5472 on time.
Open a dedicated US business bank account. Mixing personal and business money destroys the clean records you need to defend your ECI position. Providers like Mercury and Wise publish their own eligibility rules for non-resident applicants, and an LLC makes you eligible to apply, though approval stays their decision. Opening a US business bank account as a non-resident walks through the documents they ask for.
Hire a CPA when you have ECI, a multi-member LLC, or any US-source income. Do it yourself when you are a single member with foreign customers and clean books. The Form 5472 filing is mechanical; the ECI analysis is where professional judgment earns its fee.
You also need an EIN, the federal tax ID, before most banks and payers will work with you. Getting an EIN as a non-US resident without an SSN explains the Form SS-4 route. An ITIN is separate and only matters when you file a personal return.
Common Mistakes
- Filing a Delaware annual report. LLCs do not file one. Pay the $400 and stop looking for the form.
- Treating the registered agent as a US trade or business. It is not. Neither is a Delaware mailing address.
- Skipping Form 5472 because income was zero. The $25,000 penalty applies to the missing form, not to unpaid tax.
- Never sending a W-8BEN. The payer withholds 30% and you chase a refund through a treaty claim you did not need to make.
- Letting the registered agent lapse. Good standing disappears, and banks and processors notice.
- Choosing Wyoming purely on fees, then raising from US investors. The conversion is more expensive than the savings.
- Assuming an SSN is required. It is not, for formation or for an EIN.
Frequently Asked Questions
Do I need to file a Delaware annual report for my LLC? No. Delaware LLCs pay a flat $400 annual tax by June 1 and file no annual report [4].
Do I pay US federal tax if my Delaware LLC has no US customers? With no US trade or business and no US-source income, there is no federal income tax. Form 5472 may still be required.
What is the deadline for Form 1040-NR for a non-resident? April 15, with an automatic extension to June 15 for non-residents whose tax home and abode are outside the US.
Is Delaware or Wyoming cheaper for a non-US resident LLC? Wyoming's annual state cost is lower, $60 minimum against $400. Delaware is the better choice if you plan to raise from US investors.
Do I need an ITIN or SSN to form a Delaware LLC? No. You need neither to form the LLC. An EIN is typically needed for banking, and an ITIN matters when you file a personal return.
What happens if I pay the Delaware $400 tax late? A $200 penalty plus 1.5% monthly interest applies, and prolonged non-payment can void the LLC.
*Last updated: February 2026.*
NexFyla helps non-US founders form US companies and set up EIN and US business banking support. If you want help with Delaware LLC formation, the $400 annual tax and your federal filings, NexFyla can assist. Start by putting June 1 and April 15 in your calendar today.
Related reading
- Delaware LLC for Non US Residents: When It Helps
- Wyoming vs Delaware LLC for Non-Residents in 2026: Which Should You Choose?
- Delaware LLC Filing Fee in 2026: What Non-Residents Pay and Why
Ready to act on this? federal tax and Form 5472 support takes the filing, registered agent and paperwork off your desk.