Canada LLP - A Tax-Free and Highly Reputable Offshore Company
If you enjoy sifting through paperwork and paying high taxes, then do feel free to close this window. Today we are going to show you where you can incorporate without all the stress, bureaucracy, and taxes. This has already helped many people to free their lives from money-related problems.
Tax-Free Income? Offshore Company? Is That Legal?
In the media, offshore companies are always associated with money laundering and tax fraud with nasty corporations hiding on small islands where they conduct their semi-legal deals under the protection of a tax haven. But is this really true?
Aside from the fact that the term tax haven implies the existence of a tax hell for entrepreneurs – *cough* Germany *cough* – it is only logical that businesses and their customers seek to pay as little tax as possible.
It is logical to consider picking a company's headquarters from a fiscal perspective. After all, doesn't the average person look to buy his weekly groceries from the supermarket instead of the gas station?
It is also economically irresponsible for nation states to neglect to establish themselves as tax havens, as I have already explained in a different blog post.
Offshore can be anything nowadays.
Not only is the stereotypical Caribbean island often quite expensive, but it also strikes many international business partners as dubious. In light of this, you should consider the highly reputable company form that is featured in this blog post. The best thing is that this is completely legal if done correctly.
One of the major advantages is that you will be safe from what will soon affect all the dodgy tax evaders. Have you already informed yourself about BEPS? Something big is coming! You should read about it but don't get scared. With this structure in place you can be saved!
The Canadian LLP Company Form
My recommendation is a Limited Liability Partnership (LLP) in Canada. This legal structure includes the following benefits:
Very Good Reputation
Canada is a great industrial nation, a G7 member, and internationally well respected. The country’s legal system is based on common law, which is popular with many former British colonies. It is a fair, stable, and reliable legal system. As I said, even your skeptical international customers and business partners will not have a problem with a Canadian company. There won't be anything standing in the way of your international business.
As an international traveller, my blog posts usually focus on other nomads who are not registered for tax in Germany and travel tax-free throughout the world. But this will also be profitable for (online) entrepreneurs who are based in Germany (for example).
Admittedly, business owners might have to pay tax on their distributed Canadian profits in their residential country but the bureaucracy can be significantly reduced. However, you have to consider not only the fiscal rules of the German Foreign Transactions Tax Act but also countries outside of Germany that might have laws regarding CFCs (Controlled Foreign Companies) which need to be considered.
Nevertheless, offshore incorporation will be profitable – even for small businesses – because of the lack of reporting obligations and the potential of eliminating business tax accountants and other administrative expenditures from the equation. For everyday business activities, a branch office in Germany for example might already be enough.
So why not consider moving your headquarters to Canada – if only on paper?
This company form has a flow-through structure, which means that the company is not required to pay taxes in Canada (even import/export or sales taxes). Only if the company conducts business within the territory of Canada will tax be charged. But if you are neither a Canadian nor live in Canada, then tax should be avoidable.
However, if your company plans to have customers in Canada someday, then a similar structure can be established in more expensive countries such as Panama, which would then be responsible for the Canadian customers. Yes, you heard it right, only distributed profits are taxable at home if you aren't a perpetual traveler like me.
No Reporting Requirements
Since your company doesn't have to pay taxes in Canada, you don't need to file a tax return. Goodbye tax accounting! There are some annual reports for LLPs but those are kept very simple and can be completed by the agency.
The same is true for a registered office because a local address is mandatory. This is the official legal address for the government or possible litigants to contact. It is, however, not intended to be your business address or mailing address.
With the agency that I refer, you will pay an unbeatable package price and obtain the registered office and the reporting for a low annual fee.
More information is available HERE. It definitely pays to escape the domestic red tape and the horrendous taxes.
I can support you in establishing your Canadian company so that the process is quick and any concerns that you have can be dealt with. Otherwise the process might take several weeks or months. You want to avoid the situation that I experienced with a more expensive agency, where, after many emails and questions, they just cancelled my order for no reason (A&P Intertrust)! Too bad when you then have to search for another agency and start the whole process over again.
Contact me and learn from my experience. The agency and I have experience – particularly with digital nomads and crypto currency friends – and can provide quality advice. We also enable you to avoid conducting your own time-consuming research. The agency works very quickly. Of course, the biggest time factor in the founding process depends on you.
You must submit all required documents to us or the agency via email. Of course, we will be available to provide advice and answers throughout the entire process. The Canadian government will need about 3-5 weeks to process the application. Then your company will officially be up and running.
No Minimum Capital Requirements
While the company will be set up with an original capital of USD $1,000, this is just pro forma and only on paper. In practice you can pay out the capital later anyway, so it won't be relevant down the road.
As the name of the legal structure suggests, a Limited Liability Partnership involves limited liability. Even though it is a partnership, the structure is legally independent of you and is its own entity.
In addition, only three Canadian provinces provide Full-Shield Limited Liability, which applies not only internally to the partners but also externally to third parties (British Columbia, New Brunswick, and Saskatchewan). We offer incorporation in British Columbia.
Numerous Business Areas
In general, there are no restrictions on the business activities of an LLP but of course there are some laws, regulations, and restricted professions in Canada. Details will need to be clarified with the Canadian government.
In general, we can say that a normal digital nomad business, such as the online sale of info products or drop shipping, will not be a problem as long as you're not shipping military weapons or illegal drugs. Other business enterprises are suitable to the Canadian structure as well.
No Bank Account Required
No business bank account is necessary during or after establishing the company. In any case, I'd recommend that you use a modern service like TransferWise instead of opening an account with an overpriced bank that is probably regulated to death.
You can also find more information about this in another article. In addition, I know a workaround solution on how to open an EU bank account with many offshore companies. Get in touch with me to find out how.
Advantages Over the Canada LP
The Canadian LP is also very popular with online entrepreneurs. However, I deliberately rejected the Canada LP and chose the Canada LLP instead because the Limited Partnership is more expensive than the Limited Liability Partnership and does not provide a full limitation of liability for both partners.
By the way, I learned from a lawyer that it is likely a myth that you can start a Canada LP with yourself as a partner. However, there are also claims to the contrary. It seems to depend on the particular province and agency.
Although there may have been some establishments of partnerships with oneself, according to the Ontario Partnerships Act these constructs lose the character of a partnership and the flow-through structure becomes obsolete. This construct also loses the tax exemption. All in all, this makes for a very questionable and legally dangerous construct.
But without this advantage the LP wouldn't offer any benefit whatsoever, which leads me to the only challenge while establishing the Canada LLP, which is a minor one.
The Only Catch
There is only one catch since nothing comes without a downside, of course. As the term partnership implies, at least two persons are required to form an LLP. However, those persons include legal entities. But for all the benefits the Canada LLP will provide, you might easily convince a friend to be your minor partner for the establishment of the company (and he will receive a small share of the profit).
Maybe you could consider your own spouse, your children, an already existing business partner, or any other trustworthy person?
Perhaps you have another corporate entity which can serve as a partner for the LLP. There are plenty of possibilities. Perhaps we may be able to assist you in finding a partner. Just ask us!
What Are You Waiting For?
If you find the idea of the Canada LLP interesting and wish to start your own business or move an existing company to Canada, don't wait to contact me for a consultation.
You can also read about how to earn tax-free income in Europe.
So what do you think about a Canada LLP? Do you think there are better or cheaper company structures elsewhere in the world? Then please write a comment below!