Delaware Franchise Tax for Non-U.S. Founders
Forming a Delaware C Corporation is a popular path for non-U.S. founders to raise venture capital, sell to U.S. clients, or access Stripe, AWS, and U.S. startup infrastructure. But many international founders miss one critical detail: Delaware Franchise Tax filing and payment—due each year by June 1.
In this blog, we’ll guide non-U.S. residents on how to file, how much to pay, and how to avoid compliance issues with Delaware and the IRS in 2025.
Relevant IRC Codes & Definitions
While Delaware tax is a state matter, foreign founders must understand how Franchise Tax impacts U.S. tax compliance under federal law:
- IRC §162 – Allows deduction of Delaware Franchise Tax as an ordinary business expense
- IRC §6038A – Applies to U.S. corporations with foreign owners; requires information returns
- IRC §7701(a)(5) – Defines foreign persons for U.S. tax purposes
- IRC §1446 – Requires withholding if U.S. entities have foreign owners with effectively connected income
Delaware doesn’t care about citizenship—every Delaware-incorporated entity must file Franchise Tax and an Annual Report.
IRS & State Form References
Federal Forms for Non-U.S. Founders:
- Form 1120 – Required if the entity is taxed as a C Corporation
- Form 5472 + 1120 – Required if 25%+ ownership is by foreign individuals
- Form SS-4 – Use to apply for an EIN, even without a U.S. Social Security Number
Delaware Franchise Tax Requirements:
- File and pay by June 1, 2025
- Minimum Tax: $400 (Assumed Par Value Method)
- Maximum Tax: $200,000 (Authorized Shares Method)
- Annual Report required with corporate details—even if you live abroad
Real-World Example
Case Study:
An Indian founder forms DelTek Global Inc. in Delaware with 20M authorized shares. No income yet. In May 2025, they realize they’ve received no Franchise Tax notice.
Result:
- Owed $180,000 using Authorized Shares Method
- Recalculated with Assumed Par Value Method = $400
- Filed both Annual Report and Franchise Tax before June 1
- Avoided penalties, preserved investor confidence
Lesson: Non-U.S. founders must act like U.S. founders—Delaware compliance doesn’t care where you live.
Step-by-Step Guide for Non-U.S. Founders
- Track your Delaware entity’s formation date and tax year
- Create a Delaware Corp portal login or use a CPA
- Choose the Assumed Par Value Method (if you have many authorized shares but few issued shares)
- File the Annual Report and Franchise Tax by June 1, 2025
- Keep filing receipts and share with your tax advisor for IRS Form 1120/5472
- Ensure your EIN is linked to a responsible party (you or a U.S. representative)
- Avoid using personal PayPal or Stripe accounts linked to the entity—this triggers IRS scrutiny
Conclusion
Non-U.S. founders forming Delaware entities must comply with state tax filings—even if you have no income, no U.S. clients, or no U.S. presence. Delaware requires all corporations to pay Franchise Tax and file an Annual Report annually, regardless of citizenship or location.
Ignoring these obligations leads to penalties, revocation, and trouble with Stripe, Amazon, or U.S. investors.
Call to Action
Need help filing your Delaware Franchise Tax as a non-resident founder?
👉 Book your session now with Anshul Goyal, CPA. We’ll ensure your foreign-owned U.S. entity stays compliant with Delaware, the IRS, and venture expectations.
Disclaimer
This blog is for educational purposes only and is not a substitute for legal or tax advice. Non-U.S. founders operating Delaware C Corporations are subject to both Delaware corporate laws and U.S. federal tax laws. Compliance includes Franchise Tax, Annual Report, and IRS filings such as Form 5472.
Anshul Goyal, CPA EA FCA, is licensed in the U.S. as a Certified Public Accountant, is an IRS-authorized Enrolled Agent, and a Chartered Accountant in India. He helps non-U.S. founders manage IRS and state compliance, structure cross-border entities, and access U.S. startup ecosystems safely.
FAQs (Top 5 High-Searched)
Q1. Do I have to file Delaware Franchise Tax if I’m not a U.S. resident?
A1. Yes. All Delaware corporations must file, regardless of founder location.
Q2. Will I receive reminders by email or mail from Delaware?
A2. No. Delaware does not always send reminders. You are responsible for knowing the June 1 deadline.
Q3. Can I file Franchise Tax without a U.S. SSN or ITIN?
A3. Yes. You can use your EIN and have a CPA file for you.
Q4. What IRS forms do I need as a foreign owner?
A4. Typically Form 1120 and Form 5472 if you own 25%+ of the company.
Q5. Can I be penalized in the U.S. for not filing?
A5. Yes. Non-filing leads to Delaware penalties, IRS scrutiny, and suspension of corporate privileges.
About Our CPA
Anshul Goyal, CPA EA FCA, is a U.S.-licensed Certified Public Accountant, IRS Enrolled Agent, and Indian Chartered Accountant. He specializes in helping foreign founders incorporate in the U.S., stay compliant with the IRS, and legally manage cross-border investments, payments, and taxes. With 2,000+ clients and $200M in savings achieved, Anshul is trusted by international founders globally.