10 Tips For U.S. Entities Seeking To Incorporate A Canadian Subsidiary

Canada has a number of unique features when it comes to private law and regulatory law, and U.S. entities need to be mindful when looking to incorporate a Canadian subsidiary. This article provides an overview of commonly asked questions that arise in connection with the establishment of a new Canadian subsidiary.

1. Relevant entities

When expanding into Canada, parties typically consider using corporations and partnerships. Canada does not have a C-Corp vs. S-Corp distinction and the concept of a limited liability company (LLC) does not exist in Canada.

That said, unlimited liability corporations (ULCs) under the laws of Nova Scotia, British Columbia and Alberta are sometimes used since they are deemed to be flow-through entities for U.S. purposes by the IRS and viewed as ordinary corporations for Canadian income tax purposes. In some cases, flow-through status from a U.S. perspective can ease IRS reporting obligations and allow for a better application of