EU to US market entry: the three structures that actually work.

Most European companies entering the US pick the wrong legal structure. Not because the options are complex, but because the defaults on both sides of the Atlantic push them toward structures that do not match what they are actually trying to build.

The majority of European founders we work with arrive at the US entry conversation with one of two assumptions. Either that US incorporation is complicated and expensive, or that it is a formality they can delegate to a lawyer in month three. Both are wrong.

US incorporation is operationally simple compared with most European jurisdictions, but the structural choice you make determines the next five years of tax, compliance, and fundraising optionality. Getting it right the first time saves you a restructuring in year two that typically costs 50 to 100,000 US dollars in legal fees and four months of executive attention.

This is what European companies actually need to know about US market entry, starting with the structure choice.

The three structures that actually work

Ignore the longer list your lawyer will present. For roughly 95 percent of European companies entering the US, the practical choice is between three options.

Option 1: Delaware C-Corporation

The default for any company with or planning US venture capital investment. American investors will not fund anything else in practice, even if they could. The C-Corp structure is how the US capital markets are built to underwrite.

Key operational facts:

• Federal corporate income tax sits at 21 percent
• Delaware charges minimal state tax on corporations that do not actually operate in Delaware, making it a clean HQ jurisdiction
• You pay state tax in whichever states you have actual employees or offices
• Requires a registered agent in Delaware (roughly 200 US dollars a year)
• Annual franchise tax runs from around 450 to 2,000 US dollars depending on share structure

Best for: VC-backed startups, any company raising from US investors, any company planning aggressive growth with meaningful US headcount.

Option 2: Delaware LLC

The structure for services firms, consultancies, and cash-flow businesses that do not need venture funding. Offers pass-through taxation, meaning profits flow to the owners' personal tax returns rather than being taxed at the corporate level first.

Key operational facts:

• Pass-through taxation by default
• For foreign-owned single-member LLCs, you must file Form 5472 annually. This is critical. Non-filing penalties start at 25,000 US dollars.
• FIRPTA withholding applies on distributions to foreign owners, generally at 15 percent
• Simpler governance than a C-Corp, no board required
• Can be converted to a C-Corp later if you decide to raise capital, though the conversion is not trivial

Best for: Consulting firms, agencies, B2B services companies, any company that will distribute profits rather than reinvest them aggressively.

Option 3: PEO and contractor, no entity yet

The structure nobody talks about, and the one that fits most early-stage US entries. Use a Professional Employer Organisation (PEO) or Employer of Record service to hire US employees under their legal umbrella. Contract directly with US customers through your European entity.

Key operational facts:

• No US entity required during the validation phase
• Common providers: Remote, Deel, Oyster, Velocity Global from the European side; Justworks or TriNet from the US side
• Typical cost: 300 to 600 US dollars per US employee per month, on top of salary and benefits
• Works well for up to 6 to 12 months, longer in some situations
• Customers sign contracts with your European entity, which has US tax implications (nexus risk) but is manageable with proper advice

Best for: Companies testing US demand before committing capital to entity setup, companies with fewer than five US employees planned, companies with US revenue under 2 to 3 million US dollars annually.

How to choose between them

The mistakes European founders keep making

We see the same five mistakes repeatedly.

Incorporating too early

Companies that set up a Delaware C-Corp before validating US demand spend 12 to 24 months burning compliance overhead on a structure that turns out not to work. The PEO route exists precisely to avoid this.

Choosing the wrong state

You do not have to incorporate in Delaware. You do have to incorporate somewhere. Delaware is the default for C-Corps because every US investor and lawyer knows Delaware corporate law by heart, which reduces friction in every subsequent transaction. For an LLC, Delaware matters less. Some companies incorporate in Wyoming or Nevada for marginally lower fees, but the savings are small and you create friction with lawyers and investors who assume Delaware.

Not registering in operational states

If you have an office or an employee in California, New York, Massachusetts, or Texas, you need to register your Delaware entity as a foreign entity operating there and pay that state's taxes on your activity in it. Failing to do this generates penalties and back-taxes that often surface during due diligence two years later, killing or discounting fundraising rounds.

Banking paralysis

After the SVB collapse in 2023, European founders often arrive confused about US banking. The practical answer today: Mercury for early-stage, Brex for companies with higher transaction volumes, Rho or Arc as alternatives, and a traditional bank like JPMorgan or Bank of America for companies with real cash management needs. Opening a US bank account as a foreign-owned entity typically takes two to four weeks with the right paperwork (EIN, formation documents, proof of address, and identity verification for all beneficial owners).

EIN delays

The Employer Identification Number is the US equivalent of a tax ID. Foreign-owned entities typically obtain this via Form SS-4 submitted by fax, which takes four to six weeks. Companies that assume the EIN is instant delay their first payroll, their first customer invoice, and their first US bank account. Apply the moment you incorporate, not when you need it.

What good execution actually looks like

The European companies that enter the US well share three traits.

They hire or transfer a US-based operator before they commit to major spending. Not a European executive visiting quarterly. Someone based in the US with real ownership over the US P&L, whether through an E-2 treaty investor visa (available to citizens of Spain, Germany, the UK, the Netherlands, and several other treaty countries), an L-1 intracompany transfer, or a US hire with executive authority.

They pick one state to operate in first, not national coverage. New York, California, Texas, and Massachusetts are the obvious candidates depending on industry. Each has different cost, talent, and tax profiles. Concentrating in one state cuts the compliance burden roughly in half compared to trying to cover the whole country on day one.

They budget realistically. European founders routinely underestimate US costs by a factor of two. Fully-loaded US salaries run 40 to 60 percent higher than equivalent European ones. Healthcare adds another 10 to 15 percent on top. Real estate in tier-one cities is expensive even with remote work. Set the US budget at double your European cost base for equivalent headcount.

The practical next step

If you are weighing a US market entry, the cheapest move you can make this month is to answer three questions:

• Do you actually need US revenue in the next 12 months, or is the US a strategic expansion that can wait?
• Are you, or will you be, fundraising from US investors within two years?
• What is your realistic US headcount plan for the first 18 months?

The answers narrow the structure choice to one of the three above, and from there the motion is mostly execution.