Payroll taxes for an employee who is not resident in Canada

In general, as a Canadian employer, if you employ an individual who is not resident in Canada, he or she will have to pay Canadian and Quebec payroll taxes, if applicable. However, there may be exceptions to this rule. Indeed, depending on the corporate structure used, the employee’s country of residence and his employment history with the employer, an employee who is not resident in Canada could continue to be covered by the social security of his country of origin.

Social security agreement  

In fact, it may be possible to continue to cover an employee for certain social charges if he is “seconded” to Canada/Quebec for his work. This employee will thus continue to benefit from the social safety net of his country of residence. To do this, the employee must be seconded from a country with which Canada/Quebec has a social security agreement in force and the required documents must be completed within the prescribed deadlines.

It can therefore be advantageous for an employee and his employer to continue to contribute in the social system of the country of origin. This brings a certain stability to the level of contributions, the employee does not have to worry about whether or not he is entitled to social benefits from the country of “posting” at the time of retirement and, depending on the country of employment, the cost of payroll taxes can be much lower than the cost of payroll taxes in the country of posting.

As of January 4, 2021, Canada had signed social security agreements with more than 50 countries and Quebec with 38 countries, including France, Belgium, Germany and the United States.  

Given the complexity of the eligibility criteria for social security agreements, we recommend that you contact us to validate your eligibility. We can also help you complete your coverage certificate requests.

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About the author

Nicolas Godbout, tax expert and financial planner, M. Fisc., Pl. Fin

Holder of a bachelor's degree in management (B. Gest.) from HEC Montréal and a master's degree in taxation (M. Fisc.) from the Université de Sherbrooke, Nicolas also completed a certificate in personal financial planning from HEC Montréal. In 2007, he successfully passed the exam of the Institut québécois de planification financière (IQPF) leading to the title of financial planner (Pl. Fin.). With more than 20 years of experience in his field, Nicolas has more than one string to his bow to effectively meet the needs of his clients in the areas of taxation, accounting services and financial planning. His personalized approach and listening skills also allow him to quickly identify what is most important to them and make the best recommendations to help them achieve their goals.