L-1 Visa Taxes: Intracompany Transfers From Canada
Residency, which payroll, the treaty's employment article, social security, and the departure
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
L-1 status lets a Canadian company transfer an executive, manager, or specialized employee to its U.S. affiliate. Tax depends on how long you're in the U.S. and who pays you: a full-time transfer usually makes you a U.S. tax resident, while a short assignment paid by the Canadian employer may stay Canadian-taxed under the treaty's employment article.
On this page
The tax picture
| Question | Answer (2026) |
|---|---|
| Does the L-1 make me a U.S. tax resident? | Usually, once the substantial presence test is met |
| Treaty employment exemption | Pay of US$10,000 or less for the year, or no more than 183 days in any 12-month period starting or ending in the year with pay not paid by or for a U.S. resident (a recharge to the U.S. affiliate generally defeats it) and not borne by a U.S. permanent establishment — available only while you're a Canadian resident, so rarely for a full transfer |
| Payroll | U.S. payroll for U.S. work in most transfers; staying on Canadian payroll doesn't remove U.S. withholding on U.S.-source wages (the Canadian employer with U.S. employees guide) |
| Social security | Stay in CPP/QPP if the assignment is expected to last 60 months or less (a transfer to a U.S. affiliate qualifies), with a certificate of coverage — otherwise U.S. FICA applies; L-1 status itself gives no FICA exemption (the totalization guide) |
| Equity compensation | Sourced by workdays in each country (the cross-border stock options guide) |
Short assignments versus transfers
A short L-1 assignment with your family staying in Canada can leave you a Canadian resident and a U.S. nonresident; a transfer with your family moving makes you a U.S. resident and, usually, a Canadian non-resident from the move date.
The Canadian side
Leaving Canada to work in the United States usually ends Canadian residency if your home, spouse, and dependants move with you (the factual residency guide) — triggering the departure tax on most non-registered property (the departure tax guide). Keeping significant ties in Canada can leave you a dual resident, with the treaty's tie-breaker deciding (the Form 8833 guide). Close or plan around the TFSA before you become a U.S. resident (the TFSA for non-residents guide).
Visa eligibility and status questions are for an immigration lawyer; this article covers the tax side.
Frequently asked questions
Am I taxed in the U.S. on an L-1?
On U.S. work — and on worldwide income once you're a U.S. resident.
Can I stay on Canadian payroll?
Possibly, but U.S. withholding obligations may still apply to U.S. work.
Do I keep paying CPP?
You can if your Canadian employer sends you on an assignment expected to last 60 months or less and gets a certificate of coverage — otherwise U.S. FICA applies.
How are my stock options taxed?
Sourced by workdays in each country between grant and vesting.
Official sources
U.S. Citizenship and Immigration Services explains: “L-1A nonimmigrant classification enables a U.S. employer to transfer an executive or manager from one of its affiliated foreign offices to one of its offices in the United States.” — U.S. Citizenship and Immigration Services, L-1A Intracompany Transferee Executive or Manager, https://www.uscis.gov/working-in-the-united-states/temporary-workers/l-1a-intracompany-transferee-executive-or-manager
The IRS explains: “You were physically present in the U.S. on 120 days in each of the years 2023, 2024 and 2025. To determine if you meet the substantial presence test for 2025, count the full 120 days of presence in 2025, 40 days in 2024 (1/3 of 120), and 20 days in 2023 (1/6 of 120).” — Internal Revenue Service, Substantial presence test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk and Canadian Tax Desk handle L-1 transfer tax planning, payroll and withholding setup, coverage certificates, and both countries' returns in the transfer year. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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