Expanding to Canada: A Guide for European Startups

In short: to set up in Canada, a European startup first needs to choose its point of entry (often Montreal for French-speaking companies, Toronto for finance), then secure immigration status for its executives, incorporate a subsidiary and tap into the available incentives (SR&ED, Quebec tax credits, support from Investissement Québec and Montréal International). Canada is also a natural springboard into the US market.

Canada attracts many European companies: stability, skilled talent, privileged access to the United States and, thanks to CETA, easier trade with the European Union. But immigration and tax rules have changed significantly over the past two years. Here's what you need to know now.

Why Canada, and why Quebec

• A creditworthy, bilingual English-French market, ideal for testing North America with less risk than the United States.
• A springboard to the United States: shared time zones, integrated supply chains and a similar business culture.
• Talent in AI, software and life sciences, especially around the universities in Montreal, Toronto and Waterloo.
• Some of the most generous R&D incentives among OECD countries, at both the federal and provincial levels.
• For French speakers, Quebec lets you work in French while accessing a North American market.

Montreal, Toronto or Vancouver: how they compare

Criteria	Montreal	Toronto	Vancouver
Working language	French and English	English	English
Industry strengths	AI, video games, aerospace, health	Finance, insurance, fintech, B2B SaaS	Clean tech, video games, Asia-Pacific
Costs (office space, salaries)	Generally lower	Higher	High
Local support	Montréal International, Investissement Québec International	Invest Ontario	Regional B.C. agencies
Best for	French-speaking startups, deep tech	Fintech, enterprise sales	Cleantech, gateway to Asia

Immigration: what changed in 2026

The end of the Start-up Visa as we knew it

Canada stopped accepting new applications to the Start-up Visa program on January 1, 2026 because of a significant backlog, and announced a new pilot program targeting high-impact entrepreneurs. At the time of writing, the details have yet to be confirmed by Immigration, Refugees and Citizenship Canada (IRCC). Don't build your plan around this program alone.

Pathways to consider

• Intra-company transfer: an executive or specialist from your European company can be transferred to the Canadian subsidiary. CETA includes specific provisions for intra-corporate transferees and investors.
• Global Talent Stream: for quickly hiring specialized technical talent, with expedited work permit processing (ESDC).
• Provincial programs: Quebec runs its own immigrant selection; the entrepreneur and skilled worker streams fall under the Ministère de l'Immigration, de la Francisation et de l'Intégration (Quebec's immigration ministry).

Have your strategy validated by a lawyer or a regulated Canadian immigration consultant: the criteria change often.

Structuring your Canadian subsidiary

Federal or provincial incorporation?

You can incorporate federally (Corporations Canada) or provincially (for example, with Quebec's Registraire des entreprises). Federal incorporation protects your corporate name across the country; you'll still need to register in each province where you do business.

Obligations to plan for

• Business number, GST/HST accounts (and QST in Quebec), payroll source deductions.
• The tax treaty between Canada and your home country to avoid double taxation.
• Documented transfer pricing between the parent company and the subsidiary.
• In Quebec: francization requirements under the Charter of the French Language, which are stricter for companies with 25 or more employees, and compliance with Law 25 on the protection of personal information.

Tapping into tax incentives

Program	What it funds	What a European subsidiary should know
SR&ED (federal)	R&D salaries and expenses	15% non-refundable credit if the company is not a CCPC; the enhanced 35% refundable rate is reserved for CCPCs
CRIC (Quebec)	R&D, innovation and pre-commercialization	Replaces several former credits for taxation years beginning after December 31, 2025; enhanced 30% rate on the first million dollars of expenses above a threshold, 20% base rate (Revenu Québec)
CDAE / CDAEIA (Quebec)	Salaries in e-business development and AI	Reformed in Quebec's 2025-2026 budget to include artificial intelligence
NRC IRAP	Advisory services and funding for innovation projects	Reserved for Canadian SMEs; check whether your subsidiary qualifies

For details on programs and rates, see our article on startup grants and tax credits in Quebec in 2026.

Getting local support

Several public agencies help foreign companies free of charge:

• Montréal International: business development, setup support and help with international recruitment.
• Investissement Québec International: foreign direct investment attraction and financing.
• Invest in Canada: the federal investment attraction agency.
• The Canadian Trade Commissioner Service in your home country.

Your setup checklist

• Market validated: first Canadian prospects or customers identified
• City chosen based on your customers, language and talent needs
• Immigration strategy validated for each executive
• Subsidiary incorporated, tax accounts opened, tax treaty reviewed
• Transfer pricing policy documented
• Francization plan (Quebec) and Law 25 compliance
• Inventory of applicable tax credits and grants
• Hiring plan for your first 5 employees
• Success metrics at 6, 12 and 18 months

The first twelve months, step by step

Period	Priorities	Expected outcome
Months 1 to 2	Choice of city, immigration strategy, meetings with support agencies	Validated setup plan
Months 3 to 4	Incorporating the subsidiary, bank and tax accounts, first workspace	Company up and running
Months 4 to 6	First executive arrives, first hires, prospecting	First meetings and pilot customers
Months 6 to 9	Business development, local partnerships, planned tax credit claims	Recurring pipeline
Months 9 to 12	Review, plan adjustments, possible preparation for the US step	Decision to accelerate or adjust

Cultural differences not to underestimate

• Canadian buyers are often more cautious than Americans and put a lot of weight on local references.
• In Quebec, the French language is a sign of respect and a legal requirement in many contexts (contracts, signage, communications with employees).
• The Canadian market is vast but concentrated: a handful of major cities and a limited number of large accounts in each industry.

Canada as a springboard to the United States

Many European companies use their Canadian base to go after the US market next. If that's your ambition, read our US expansion guide: the structure you choose in Canada today will affect your future entry into the United States.

How SFB Consultants can help

Sandra D'Orazio helps European and American startups enter Canada: choosing the city, sequencing the steps, making introductions to support agencies and experts, then executing the commercial plan. Learn more about our international expansion and startup growth services.

Getting ready to launch in Canada? Book a 30-minute discovery call with Sandra to validate your setup plan and avoid costly mistakes in the first few months.