Canada is one of the most developed countries with stable financial system and high level of income per capital. One of the most popular business vehicles for foreign investors is setting up a Limited Liability Partnership or LLP where partners are limited in their personal liability for obligations of partnership. The most advantageous are LLPs registered under the laws of the British Columbia. 

LLPs typically comprised of:

• a General Partner
• a Limited Partner

General and Limited Partners can be individuals or corporate entities. Canadian residency is not required for the general partner nor the limited partner. The same person can be both the general partner and a limited partner. Companies incorporated outside of Canada are permitted to be partners of an LLP after registering as extra-provincial company in Canada.

LLPs should not be confused with LPs (Limited Partnerships). In LPs, the general partner has unlimited liability for the debt, and any limited partners have limited liability up to the amount of their investment. In LLPs, both general and limited partners are equalised in limitation of their personal liability for obligations of partnership.

A partner nevertheless may be personally liable in case of his/her own misconduct or omission. In such case, the LLP itself can be sued, and the assets of a particular partner who did something wrong will be at risk. However, the assets of the other partners will be protected.

Another benefit of the LLP registered in the British Columbia is the possibility to carry out any kind of business. In other provinces in Canada, LPs are usually limited to regulated professions, such as lawyers or accountants.

Main benefits of Canadian Limited Liability Partnership:

• Limited Liability of Partners
• Simplified structure
• Greater control and freedom
• No tax paid at the partnership level
• Cost-effective in the long run
• Protection afforded by Canadian laws and courts
• No restrictions on the residency of Partners
• Can be composed of a single person or of multiple partners
• No minimum authorised capital
• No requirement to file tax returns, financial statements or audited accounts

There is no tax paid at the partnership level for the Canadian LLP. Foreign Partners are exempt from the federal and provincial taxes or corporate income tax if the profits are derived from non-Canadian sources. Only Canadian residents must pay personal income tax on the profits received from the partnership. Moreover, there is no requirements to file corporate tax returns. For this reason, Canadian LLPs are popular among foreign entrepreneurs and companies interested in having a presence in Canada.