Can sell a Canadian company to Americans

Investing in Canada - Investment Opportunities, Tax Breaks & The Canadian Stock Exchange


All about investing in Canada

Investment law:Defined by investment promotion laws such as Investment Canada Act; every economic agent is allowed to invest

Investment opportunities: Raw materials & precious metals, start-ups, stocks, real estate

Tax payment: Comparatively few taxes within Canada; Withholding tax can be partially reclaimed

Prominent stock indices: S & P / TSX Composite Leading Index, S&P TSX 60, MSCI North America, MSCI Canada


While Canada has long been overshadowed by the US, private investors may now invest in Canadian stocks or other assets under certain circumstances. Canada is particularly known for technical progress and the enormous supply of raw materials and precious metals.

For this reason, investors and private investors should take a closer look at these aspects of the commodities market, should an investment in Canada be considered. Which type of investment an investor ultimately decides on has to be determined individually. The investment promotion laws simplify an investment in the stock market, real estate or commodity investments by private investors.

The following article highlights the legal bases for investing in Canada such as the investment promotion laws. In addition, numerous possibilities such as commodity investments or investments in the stock market are explained and presented.

Investment Law & Opportunities in Canada

Basically it is with the investment promotion lawsevery economic agent free, incanadianReal estate or stocksto invest. However, it should always be noted that the Legal bases may not be identical between the different countries. This applies to general investments, commodity investments or price gains in the stock or commodity market.

Through the Investment Canada Act become any potential investor Regulations that are essential for an investment in Canada. The results of the investment opportunities differ in part between the countries.

What is the Investment Canada Act?

Non-Canadians who want to invest in Canada must comply with the Canadian Investment Act. The Investment Canada Act aims, among other things, to help ensure that the Canadian market more attractive to non-Canadians becomes. Through this, among other things, the Investment in itself, as well economic growthimproved become.

On the other hand, this rule serves that protectionCanada. This ensures that any investments are only made that do not endanger national protection.

Note

The regulations of the Investment Canada Act apply to any non-Canadian who wants to become part of an existing company or start a new company.

Investment in Canadian commodities

Investing in Canadian commodities such as precious metals offer a great option of one second mainstay for investors. Political and economic crises have usually strong influence on raw materials. Because Canada is stable in this regard, the potential risks of these factors are very limited when investing in commodities.

Due to the high density of raw materials in Canada, this country in particular offers investors in commodities an attractive opportunity for price gains. Especially Oil, tar sands and gas are funded in Canada. As the largest exporter ofZinc, uranium, cadmium and nickel worldwide, appropriate funding companies are also available. If you want to include such a raw material in your portfolio, you will find numerous financial products for it.

For example, the shares of Parkland Fuel Cooperation , one of the largest fuel retailers in Canada based in Calgary. It sells petroleum products and fuel. The company has shown steady growth and is expected to grow by a further 20% in the coming year.

The company tooPembina pipeline offers interesting stocks. The stocks pay monthly dividends of around 5% and offer investors a relatively safe investment opportunity. The company is a Oil and natural gas supplier in Kananda with a turnover of Can $ 7,315 million (in 2018).

Note

Shares in commodities companies can also be traded on the Toronto Stock Exchange on each trading day.

Investment in Canadian startups

Start-up companies may offer one lucrative opportunity for investments. Especially with a view to the technical area there are a large number of start-ups in Canada.

Despite the fact that the US does a large chunk of funding for many Canadian startups, private investors are important. In the last few years the numberthe private oneInvestors for startups in Canada increased enormously. The sums of private individuals' venture capital are increasing. An investment can be, for example, as Business angel directly or via the so-called Crowdfunding function.

A steadily growing start-up is for example "Zoom.ai”From Toronto. The start-up is based on one AI softwarethat automates organizational tasks such as booking appointments and thus offers a virtual assistant. Even Microsoft and Google are already interested.

But also the start-up "Element AI”From Montreal looks promising. The company is up artificial intelligence specializes and offers other companies a tailor-made service and algorithms for their requirements. The company was founded in 2016, already has five offices worldwide and is working on constant progress in research on artificial intelligence.

Investment in stocks, funds & ETFs

There are many investments in this area in the Canadian market. Investors who can assess the individual companies and the market situation can, if necessary, Individual shares of certain companies acquire. There are suitable ones for better risk diversification Investment funds with a focus on Canada.

Worthwhile stocks are currently those of theCanada Goose Holdings Inc, one of the fastest growing companies on the TSX (Toronto Stock Exchange). Profit growth is currently 25% per year. The company manufactures winter clothing and had sales of $ 591 million in 2018.

Provide the cheaper alternative ETFs on major Canadian indices which are explained in more detail below.

TheMSCI North America is the most important stock index in Canada. He represents the development of the Canadian large cap and mid cap companies. The extent to which the respective companies are weighted in the index depends, among other things, on their individual size. The MSCI North America consists of 93 individual components and will revised at least every three years and weighted.

Two important ETFs on the Canadian stock exchange emerge from the MSCI North America. On the one hand, this is the Comstage MSCI North America TRN UCITS ETF with a Fund size of about € 212.6 million. This ETF corresponds to accumulating Model of an ETF. This means that the generated returns are immediately reinvested instead of being distributed to the investor.

On the other hand, there is that iShares MSCI North America UCITS ETF. This has a size of around € 2.166 billion. Unlike the Comstage MSCI, this is a distributing ETF.

Aside from the MSCI North America Index, there is also the relevant one MSCI Canada Index. The top companies in the index are (as of December 31, 2019):

CompaniesMarket capitalizationIndex weightingBranch
Royal Bank of Canada$ 113.62 billion7,53 %Finances
Toronto Domino Bank$ 102.17 billion6,78 %Finances
Enbridge$ 80.58 billion5,34 %energy
Canadian Natl. Railway$ 65.05 billion4,31 %Industry
Suncor Energy$ 51.12 billion3,39 %energy
Shopify A$ 39.95 billion2,65 %technology

The MSCI Canada Index is made up of 90 individual values ​​on which a large number of ETFs are also mapped:

db x-trackers MSCI Canada Index UCITS ETF 1C
  • Home: Luxembourg
  • Fund size: around € 49 million
  • Accumulating ETF
MSBC ETFs PLC - MSCI Canada UCITS ETF USD
  • Home: Ireland
  • Fund size: around € 35 million
  • Distributing ETF
iShares MSCI Canada UCITS ETF
  • Home: Ireland
  • Fund size: around € 457.5 million
  • Accumulating ETF
UBS ETF plc - MSCI Canada SF UCITS ETF (CAD) A-acc
  • Fund size: around € 45 million
  • Accumulating ETF
USB-ETF SICAV - MSCI Canada UCITS ETF (CAD) A-dis
  • Fund size: around € 135 million
  • Distributing ETF

Investment in the Canadian real estate market

The Selection of real estate is on the Canadian market diverse and therefore offers the right property for every interested party. Depending on the region of Canada the real estate is either Luxury real estate, Single family homes or Country houses.

They are as diverse as the offers themselves corresponding prices. The Price per square meter depends, among other things, on the Location of the property from. While the prices for real estate in densely populated regions of Canada are quite high, investors can find very cheap offers in the northern regions. However, these are often undeveloped properties.

For example, a very popular area for condominiums and single family homes is Toronto Downtown. However, the prices here are largely determined by the sellers, as the demand is very high.

A big trend in Canada is oneecological and green construction of real estatewhich also have equipment such as solar systems and rainwater cisterns. Investments in such properties are very worthwhile and sustainable in the long term.

tip

In particular in areas where growth is expected, an investment in real estate is an idea that can be attractive to investors. There are numerous mutual funds targeting this segment.

Why investors should invest in Canada

Investing in Canada as an investor makes sense due to various factors. In the past Canada was often overshadowed by the US. Since the election of Trump in the US and Trudeau in Canada, however, the tide has turned. And for the good of the Canadians.

Reasons to invest in Canada:

  • Canada is shaped by Liberality and reliability.
  • The economic situation in Canada is solid. As a result, investors have to fear foreseeable risks.
  • Canada owns enormous growth potential. This results in particular from factors such as free land, own raw materials, a high level of education and a growing population.
  • The Manpower Canada's are not infrequently clear more qualified than those of other countries, which can lead to better results within the company.
  • The Canadian Banks are in a good shape. The banks even survived the last financial crisis almost unscathed.
  • An investment in Canada is due to the low taxes relatively cheap.

Tax breaks when investing in Canada

Looking at companies in a global comparison, Canada ranks a very high low tax rate in front. If you compare Canada's total tax rate with that of the other G7 countries, Canada is still below average. Canada's total tax rate is nearly 50% lower than that of the US. Also the Business expenses play investors in the cards. These are for example much lower than in the US. The cost of doing business in Canada is one of the lowest cost of this kind of all G7 countries.

It comes to Dividend distribution of Canadian stocks for non-Canadian investors, these are common taxed twice. In Canada itself, 25% withholding tax is levied on dividends, in Germany it is another 10%. So overall will be 35% of dividends are taxed. Due to double taxation, investors have the opportunity Reclaim 10% of the withholding tax. You can do this by filling out an appropriate form.

tip

A separate form must be submitted for each dividend payment. This can be downloaded from the Federal Central Tax Office (BZSt) with the foreign forms.

Investing in Canada - This is what to look out for

If you invest in real estate in Canada as a non-Canadians, different aspects should definitely be taken into account. Basically, before making a binding purchase of a property, it should be checked exactly what condition it is in. This is not only recommended in Canada. Such a procedure should always be used. As a rule, if the buyer does his due diligence, not much should happen because he should be aware of the location and the Condition of the property be sufficiently informed.

Similar to some European countries is Canada for buying a propertynonotarial certification required. You should definitely refrain from signing any kind of forms too quickly. The sales contract can be made through a broker.

tip

It is advisable to have negotiated contracts with a broker checked by a lawyer before they are signed.

It is particularly important to note that the Owning a property does not result in a permanent residence permit, let alone Canadian citizenship. If the duration of the visa is not adhered to on time, a lifelong entry ban can be the consequence in the worst case. In such a case, it does not matter how much real estate is owned by the person concerned.

The Canadian stock exchange at a glance

There are also a number of stock exchanges in Canada. In addition to the Toronto Stock Exchange (TSX), there is, for example, the Canadian National Exchange (CNSX) as another exchange.

Canada Stock Exchange Holidays

As in Germany there is on the Canadian stock exchange public holidays, on which no trading is possible. In international trade in particular, it is important to keep an eye on the dates on which holidays take place in the relevant country. This is important to investors for a variety of reasons. On the one hand, as the term already suggests, there is no stock exchange trading on stock exchange holidays.

Furthermore, and this is probably something few investors are aware of national holidays may have an impact on the share price and the IPO. It is advisable to develop appropriate background knowledge in order to be able to anticipate the extent to which the price of the stock will change due to the holiday.

Canadian Stock Exchange Holidays that do not coincide with German Stock Exchange Holidays:

  • 20.05.
  • 01.07.
  • 05.08.
  • 02.09.
  • 14.10.

Canadian Stock Exchange trading hours

Looking at the trading hours of the Canadian stock exchange, it can be seen that these do not coincide with the trading hours of the German stock exchange. The reason for this lies in the time shift. Basically, exchanges have similar trading periods on average. Usually these are between 8:00 a.m. and 10:00 p.m. in the evening. Between Germany and Canada a Time difference of six hours this is to be included in the trading hours of the Canadian stock exchange.

In addition, there are regular regional differences in trading hours. The following table shows these.

Stock indices on the Canadian Stock Exchange

In addition to the large general indices such as the MSCI Canada, there are also some local stock indices. The following table shows the most relevant of these Canadian stock market indices.

S & P / TSX Composite Leading Index
  • Includes over 250 of Canada's largest companies
  • Is considered the benchmark of the Canadian economy
  • Is the equivalent of the US S&P 500 Index
S & P / TSX 60
  • Represents the market price index of the 60 largest companies on the TSX
S & P / TSX Completion Index
  • Covers all stocks in the S & P / TSX Composite Leading Index that are not included in the S & P / TSX 60 Index

Bottom line: does it make sense to buy stocks in Canada?

For investors from other countries, it can make perfect sense to buy stocks in Canada. However, it is particularly important here that other guidelines may apply than in Germany. Care should always be taken to make your own equity portfolio as diverse as possible in order to guarantee risk diversification. Canada correlates with the USA in many sectors, as 70% of raw material exports go to the neighboring country, for example.

As a result, Canadian stocks can provide stability in the portfolio. However, it is important to consider which correlations and duplications arise from different indices. Those who can do this can achieve further diversification with Canadian stocks.


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