Whether you’re a Canadian company with US business activities, a US business operating in Canada, or an individual, expatriate, or investor with interests in both countries, Fuller Landau can advise and help you manage the complexities of cross-border taxation.
Ongoing free trade negotiations prove the economies of Canada and the United States are essentially interconnected. Outsized nearly 10 to 1 in population, Canadian business needs to participate in the US marketplace to achieve critical volumes. And while less dependent, US companies look to Canada for financial and natural resources, innovation, and a highly-skilled labour pool.
Stakeholders mistakenly assume our shared border, language, and cultures translate into similar tax systems with any dissimilarities mitigated by the US Canada Tax Treaty. Such assumptions couldn’t be farther from the truth. Whereas Canadian federal and provincial taxes are generally integrated with one another, the US has one set of Federal tax laws (i.e., the Internal Revenue Code) and no national VAT tax (aside from specific federal excise taxes). State income tax laws often apply Federal tax principles, but each state is free to make its own modifications and is not required to follow the Treaty. And state sales taxation is not harmonized at the federal level or among the states. Thousands of localities impose their own tax rules, from income taxes to sales taxes.
Cautious stakeholders contemplate cross-border tax in their business plans from choice of entity and domicile to business registration and tax compliance. And for the aggressive entrepreneur who didn’t consider these things, remedial steps may mitigate tax and penalty exposures including voluntary disclosure.
Fuller Landau’s professionals can assist on both sides of the border, from advising on the optimal jurisdiction and type of entity, to registration with the Canada Revenue Agency, the Internal Revenue Service, and each state and localities where needed. We prepare Canadian and US federal and state tax returns. We work with Canadian and US attorneys.