Canada is often the first North American step for French-speaking SMEs: a more compact market than the US, a free trade agreement with the EU and a French-speaking province. But setting up there follows its own rules, different from the US and different from one province to another.

Export, open a branch or form a subsidiary

  • Export from Europe through a distributor or directly, to test the market.
  • Register a branch of the European company in a province: simple, but the parent remains directly exposed.
  • Form a Canadian subsidiary: limited liability, local credibility, and often needed to hire, lease or sign with large accounts.

Federal or provincial corporation?

A company can be incorporated federally (Canada Business Corporations Act) or in a province. The choice matters directly for a foreign investor:

  • federally, at least 25% of directors must be resident Canadians (at least one if the board has fewer than four members);
  • Ontario removed this requirement on July 5, 2021, and Quebec and British Columbia have none.

A federal corporation must still register in every province where it operates. For a European SME without a Canadian director, provincial incorporation is often simpler.

CETA: an under-used advantage

The Comprehensive Economic and Trade Agreement between the EU and Canada has applied provisionally since September 21, 2017. According to the French Treasury, it has eliminated 98% of tariffs on goods. To benefit, you must prove the European origin of your product:

  • obtain an EORI number and, depending on amounts, a REX registered exporter number;
  • check the rules of origin for your product;
  • include the origin declaration on the invoice.

Without these formalities the product pays the standard duty and the advantage is lost.

Sales taxes: GST, HST and QST

A non-resident carrying on business in Canada must register for GST/HST once its worldwide taxable supplies exceed CAD 30,000 over four consecutive quarters (or in a single quarter), according to the Canada Revenue Agency. Quebec adds the QST, administered by Revenu Québec. The “carrying on business in Canada” test is precise and should be checked before the first contract.

Quebec: French-speaking, but not “like France”

Since June 1, 2025, the final provisions of Bill 96 on the Charter of the French Language apply:

  • generic or descriptive terms included in a trademark on a product must also appear in French (2-year grace period for products made before that date);
  • on outdoor signage, French must be markedly predominant;
  • businesses with 25 or more employees in Quebec must register with the Office québécois de la langue française.

Vocabulary, business practices and expectations differ from France: a French product still needs adapting.

Key takeaway

Canada is a good gateway to North America provided you choose the right jurisdiction, actually use CETA and anticipate the tax and language rules of the target province.

Frequently asked questions

Do I need a Canadian director to incorporate in Canada?

For a federal corporation, at least 25% of directors must be resident Canadians. Ontario, Quebec and British Columbia do not impose this requirement.

Do European goods enter Canada duty-free?

In most cases yes, thanks to CETA, which eliminated 98% of tariffs on goods, provided the European origin of the product is proven.

When must I register for GST/HST?

A non-resident carrying on business in Canada must register once taxable supplies exceed CAD 30,000 over four consecutive quarters or in a single quarter.

Sources

External links checked on October 24, 2026.

This guide is not legal or tax advice. Incorporation and tax obligations should be validated by a Canadian lawyer and accountant.

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