The Canadian legislation makes it possible to use the companies with a zero tax rate - LP (Limited Partnership). LPs are not legal entities, but they have their features: they can open bank accounts, enter into transactions with counterparties within the framework of the activities carried out, etc. The Canadian LPs with foreign founders which do not conduct commercial activities and do not receive income on the territory of the country are exempt from paying taxes.
LP company in Canada is not a separate subject of taxation, and its partners pay their taxes on profits at the place of their residence according to their interests in LP (provided that this is stipulated by the legislation of a particular country).
A company in Canada can conduct business with English and Scottish partnerships, as well as with the US companies, in a tax-free regime (similar to offshore companies). Naturally, provided that the partners of the LP company are non-residents of Canada and the company has no domestic activities.
In some provinces of Canada, for example, in the province of Alberta, the register of companies is closed, which allows to preserve the owner's privacy.
Features of Canadian partnerships LP:
1. The name of the company must end with a word, phrase or abbreviation, which indicates the limited liability of the company.
2. The minimum authorized capital is 1000 CAD, but there are no specific requirements for its payment.
3. The founders may be minimum of 2 partners, physical or legal entities, there are no requirements for their residence.
4. One of the partners, the resident of any country, should be appointed as the General Partner. He bears unlimited liability for LP obligations and manages the partnership. LP does not have a director, the general partner manages.
5. Corporate general partners are allowed. If the corporation is registered outside of Canada, it is necessary to register it as an extra-provincial corporation (EPC) in advance for its appointment as the general partner.
6. A limited partner, a resident of any country, is responsible for obligations of LP by its contribution to the partnership, but he does not participate in the management of the company. He can be any physical or legal entity. In the event that not Canadian corporation is appointed as a limited partner, there is no need to register it as an extra-provincial corporation in Ontario.
7. A physical person can be a general partner and limited partner at the same time. Thus, one physical person is sufficient to register LP.
8. Partner relations are governed by a partnership agreement, which is drawn up according to their needs and wishes.
9. LP companies must have a local secretary.
10. LP companies are not required to file an annual financial report if they do not conduct business in Canada.
In the form confirming the registration of LP, the address of the registration office must be indicated. The copies of all partner resolutions and a copy of the Partnership Agreement should be kept in it. The official correspondence from the Government of Ontario is also received at the address of the registration office.
12. Limited Partnership is not subject to taxation. Therefore, LP should not file a tax return and pay income tax. All profits received by the Limited Partnership are distributed among the partners. Partners which are not residents of Canada do not have tax liabilities in it. If the partner is a resident of Canada, he is obliged to include his part of the profit received as a result of LP activities in his personal tax return and pay income tax.
Canadian partnerships are an ideal choice for business, which involves the purchase of goods in the EU countries and their export to other countries (including Ukraine). On using the company with this purpose, the registered seller in any EU country is not always sure whether the operation is an export from the EU (and thus exempt from VAT procedures) or not. When using a Canadian company, the exports from the EU are obvious.
The partnerships in Canada are also suitable for IT developers, whose main buyers are located in Canada, the US and the EU. In addition, partnerships will help to conduct online business (website development, marketing, auctions, online stores, etc.).