Structuring Your Company for Cross Border Opportunities in Life Sciences By Cheryl Reicin, International Chair of Life Sciences at Mintz, with Luke Jeagal, Associate at Mintz
70
Fall | Automne 2024
BIOTECanada
ANY SUCCESSFUL CANADIAN LIFE SCIENCE COMPANY will at some point need both U.S. and Canadian entities. There are a different number of factors to consider in structuring these entities. Which entity should hold the IP? Which entity should hire the employees? Which company should be the parent company, in other words, which company will investors fund? A little planning at the beginning will avoid large costs and disruption down the road. WHERE TO HOLD THE IP? Unless a company has or expects to have significant tax losses in the U.S., we generally (but not always) recommend that companies hold their intellectual property (including U.S. patents) outside of the U.S. due to higher U.S. corporate tax rates and the difficulty of moving IP outside of the U.S. later. For these reasons, Canada is generally preferable to the United States as an IP holding jurisdiction. Canada may soon become even more attractive, as the Canadian government is currently considering the implementation of a “patent box” regime that would set lower corporate tax rates for income earned from intellectual property held in Canada.