Already an Angel? Become a VC in two working sessions, and we will invest in your fund. Seats close Sept 15.
Save My Free Seat
Cohort 22 launches September 10. Bring a founder, an angel, or an LP who belongs in the room. The VIP Launch Mixer is free and online.
Reserve a Spot
Previous Post
Next Post
3

Asked by

Community Member

on

in

General

Canadian Domicile in the US

One of my larger LPs can only invest in US entities, and my largest LP doesn't require but would prefer I domicile in Delaware. As a Canadian is that going to be an issue? Are there major tax issues I'll face? My wife is American, but not planned to be involved in the business (if that could help.)
1 See in Base
3

Answered by

Community Member

on

Hi Scott, unfortunately it is not ideal for you as a Canadian to domicile your entities in the US. The reason being is that Canada does not recognize US LLC's as an entity type. You end up getting hit at a much higher tax rate on both your management fee income and any carry as it would get hit at a corporate tax rate and again when you take a distribution.
0

Answered by

Community Member

on

Hmmm is there a situation that I could create a US Corp for the US investors that then invests in the Canadian Fund? The US Investor said that the fund could invest outside of the US, it was their direct investment that had to go to a US corp.
0

Answered by

Community Member

on

We're not Tax advisors Scot and we strongly recommend that you do not try to advise your LP on their tax situation. The Ontario fund structure is favorable for American LPs, so consider pushing back on this.

Join VC Lab

Raising your first fund? VC Lab has helped launch 950+ venture firms, with no fees and no equity taken. The average Start Fund reaches first close in 58 days.
Apply Now