(Article published on March 2, 2016, on the website of YAD International)
Your head office is located outside Canada, and you are in the technology development business. Have you ever thought of setting up an R&D team in Canada? In addition to abundant local expertise and cutting-edge infrastructure, the federal and provincial governments provide very attractive tax incentives.
Are you in Europe, in Asia, or anywhere in the world, and think Canada is the land of winter and of igloos? Maybe, but it is also much more than that! It is one of the most advanced nations on the planet in terms of innovation, as well as research and development. The country considers such investments to be strategic for its competitiveness in the face of globalization. Results: over the last quarter century, Canada has brought in tax incentives to encourage R&D investments, supported by annual budgets of several billion dollars.
As Pierre Savignac, Founding CEO of Emergex SR&ED Consultants, puts it: “The largest industrial research assistance program in Canada is known as Scientific Research and Experimental Development (SR&ED). Quebec also has a program aimed specifically at information technology, and it is known as the Tax Credit for the Development of E-Business (CDAE). These two sources of public assistance are also available to foreign businesses.
The SR&ED program allows a foreign company established in Quebec to claim up to 35% of R&D employee salaries, versus up to 74% for a Quebec company. There’s also 18% of subcontractors’ fees that can be claimed (38% for a Quebec company). For the CDAE program, we can claim 30% of gross salaries, but the program covers a broader range of technical activities. It is thus possible and financially profitable for a foreign company to create an R&D team in Canada.
For French companies in particular, Quebec provides a variety of additional benefits. “We share a common language, a common culture, a similar legal system, as well as exclusive immigration agreements which facilitate employee movement from one side of the Atlantic to the other”, adds Pierre Savignac. The CEO of the firm which specializes in SR&ED, relates the cases of some of his French clients: “Labour laws in Quebec are way more flexible than in France! Being able to correct a ‘hiring error’ by paying out just two weeks of severance pay creates a dynamic professional environment which fosters meritocracy and investment.”
Many Canadian and foreign companies are already enjoying these generous grants and subsidies. So, why not you? You must also be aware that firms such as Emergex SR&ED Consultants are experts in preparing SR&ED and CDAE claims and can thus guide and advise you in all your efforts.
Contact the experts at Emergex today for more information about these programs and their unique features!