Start-up entrepreneurs looking to scale their business globally should consider moving to Canada. Consistently ranked as ones of the best countries to do business in the G20, and strategically located near other key global economic centers, Canada provides businesses with unparalleled access to the world's largest markets. Aside from the many tax benefits Canadian incorporation may bring, entrepreneurs may also benefit from a quick and cost-effective immigration process under Canada's Start-Up Visa program.
Launched in April 2013, the Start-Up Visa program is a special immigration stream that caters to the needs of high-potential entrepreneurs. This program grants permanent resident (PR) visas to foreign entrepreneurs who intend to operate a business in Canada that has received at least one of the following:
- An investment of at least $75,000 from a designated angel investor group;
- An investment of at least $200,000 from a designated venture capital fund; or
- Acceptance into a business incubator program by a designated business incubator.
All types of businesses are eligible under the program, provided they obtain the necessary support from an organization designated by the Minister of Citizenship and Immigration to participate in the Start-Up Visa program (a "designated entity").1 It is important to note that qualified businesses must be incorporated in Canada prior to or upon the issuance of PR visas to the applicant(s). The program also requires some re-organization of the applicant's corporate structure. One potential hurdle applicants may face is the issue of IP ownership. The program requires that the applicant has control over IP (and other assets) that it is bringing to the business. While a transfer of IP to the Canadian company is not necessary, a transfer may provide an expedient way of demonstrating the applicant's control over the IP, particularly where control is unclear or not attributable to one applicant. Applicants should be cautious of the tax implications of such a transfer, which will be determined by the laws of their home country. Coordination with the applicant's local counsel is encouraged during this phase of the application. Overall, the Start-Up Visa program provides ample flexibility for applicants to structure their new business in a way that allows them to react quickly to potential opportunities.
The Start-Up Visa program allows up to five individuals who play an essential role in the qualified business to apply for a PR visa. Each applicant must have basic English or French communication skills, at least one year of post-secondary education and sufficient settlement funds. The spouse, common-law partner and children of the applicant may also apply for a PR visa under the same application. Start-Up Visa applicants must intend to live in a province or territory other than Quebec. Entrepreneurs intending to live in Quebec should apply under the Quebec Entrepreneur Program.
Successful applicants will receive their permanent residency in less than 6 months after submission. Applicants with urgent reasons to arrive and work in Canada prior to receiving PR status may apply for a Start-Up Business Class Work Permit.
The Start-Up Business Class work permit requires a letter of support from the designated entity explaining the need for the applicant's early entry to Canada. This permit is typically issued quickly to enable the applicant to conduct investor meetings, attend incubator sessions, incorporate and operate a company prior to receiving permanent residency. Spouses and common-law partners of Start-Up Business Class work permit holders may apply for an open work permit.
It should be noted that the permanent resident visa, once granted, will not expire or be revoked should the applicant's business fail. Successful applicants may apply for Canadian citizenship after physically living in Canada for a period of four years (within a six year period) as a permanent resident. This is in contrast to other start-up visa programs around the world (ie. in Germany, Ireland, Singapore) in which residency is granted for a limited time period and extension of the visa is contingent on the success of the applicant's business.
The program has the capacity to accept 2,750 applicants per year. While demand has been rising, the number of applications received per year falls significantly below the quota. As of May 2, 2016, 51 entrepreneurs from 26 startups have received PR status through the program. The successful applicants come from a diverse range of countries, including Australia, China, Costa Rica, Egypt, India, Iran, South Africa and Uruguay, and across a number of industries, including technology, food product manufacturing, education, medical research, banking, human resources, and advertising.
The Dentons' Venture Technology Group has extensive experience in servicing start-ups and providing strategic advice on immigration, tax, corporate financing, structuring and governance issues in connection with the Start-Up Visa program.
This article was co-authored by Andre Garber, Director of the Dentons Canada Startup Program and by Kailin Che, a student in Dentons' Toronto office.
Footnote
1 For a list of the designated entities, please visit: http://www.cic.gc.ca/english/immigrate/business/start-up/eligibility/entities.asp
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