The three pillars of cross- border expansion – Canadian private business expansion to the United States

By R. Oliver Branch and Aasim Hirji, Moodys Tax Law LLP

Regardless of what you might hear in a slick marketing pitch by one of the behemoth law and advisory firms, strategic global mobility planning is not a one-size-fits-all endeavour. When assisting a private business expansion across borders, a strategic, jurisdictionally-specific approach is required to ensure that you don’t solve one problem while unintentionally leaving your client with a handful of new problems.

For the clients of our firm’s US and Canadian immigration, tax, and corporate legal practices, we use what we call the “three pillars of crossborder expansion” to help our clients expand with peace of mind. Below are key components of these three pillars that should be considered in advance of cross-border expansion.

Pillar 1: Corporate law considerations

1. What is the current Canadian corporate structure, and what structure should be used in the US?
2. How will federal, state, and local jurisdictional laws, regulations, and policies impact expansion?
3. What impact will expansion have on financial arrangements, including banking, lender approval of asset moves, and required security for assets in the US?
4. How will the nature of business activities and location of incorporation, customers, and business activities impact corporate structuring and jurisdictional compliance? What laws will apply with respect to employment matters?
5. What type of commercial agreements are required between the different jurisdictions and in the US?

Pillar 2: Immigration law considerations

1. Have the Canadian company’s personnel faced any prior diffculties entering the US for personal or business-related activities? Put another way, is the business itself, or are certain personnel, “flagged” by USCIS?
2. Which US immigration programmes and provisions are the most advantageous for the corporate structure, nature of the business, type of worker (managerial, professional, or skilled), and citizenship of personnel required to manage the US business and transfer specialised and proprietary knowledge to any planned US personnel?
3. Does the company plan on sending intermittent business travellers, seconding employees on a short-term basis, and/ or transferring key Canadian personnel permanently to the US?
4. Will the US expansion likely lead to mergers, acquisitions, or restructuring that could impact eligibility for certain nonimmigrant and immigrant immigration programmes?

Pillar 3: Tax law considerations

1. What will trigger a taxable presence in the US for the Canadian company?
2. Should you establish a subsidiary or a branch?
3. Will the planned activities in the US trigger a project, key person, or services permanent establishment?
4. How will Canada’s foreign affliate regime impact objectives? What is the most effcient way to repatriate profits?
5. What sales tax considerations may arise?

R. Oliver Branch

GGI member firm
Moodys Tax Law LLP
Fiduciary & Estate Planning, Law Firm Services, Tax
Calgary, Edmonton, Canada
T: +1 403 693 51 00
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: moodystax.com

Moodys Tax Law LLP has one single focus: tax. They provide tax advisory and planning for individuals with personal and business interests on either side of the Canada-US border, no matter where they live in the world. With more than 15 years of experience playing key roles in some of the world’s leading immigration law firms and international global mobility consulting groups.

R. Oliver Branch is uniquely qualified to provide US legal advice in all areas of US im- migration law and related global mobility services.

Aasim Hirji

GGI member firm
Moodys Tax Law LLP
Fiduciary & Estate Planning, Law Firm Services, Tax
Calgary, Edmonton, Canada
T: +1 403 693 51 00
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: moodystax.com

In a world fuelled by transactions, Aasim Hirji stays focused on his values – building relationships based on understanding and trust. With experience in both accounting and law firms, Aasim brings with him a well-rounded perspective on the industry he loves. Aasim finds joy in the intellectually diverse and dynamic field of tax law.

Published: Global Mobility Solutions Newsletter, No. 01, Spring 2022 l Photo: edb3_16 - stock.adobe.com