Entity Setup
Entity Setup for Expats: Navigating ‘One, Big, Beautiful Bill’ & Canada’s Draft Amendments
For digital nomads and global entrepreneurs, new US inflation rules and Canada’s proposed changes to the qualified investment regime mean careful entity design could significantly change your after-tax profits.
By NomadicTax Research Team • 5-8 min read • February 21, 2026
## Why Entity Type & Jurisdiction Matter More Than Ever
US inflation adjustments under the One, Big, Beautiful Bill and Canada’s **January 29, 2026** consultation on previously announced tax measures—especially for investment vehicles—are altering the calculus on entity setup. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
US changes affect standard deductions, estate thresholds, and depreciation allowances; Canada is seeking stakeholder feedback on the implementation of existing, budget-approved reforms including the **Qualified Investment Regime for Registered Plans**, to ensure clarity and guard against avoidance. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/01/government-launches-consultation-on-draft-legislation-for-previously-announced-and-technical-tax-measures.html?utm_source=openai))
## Key Considerations for Expat & Global Entrepreneurs
- **US Filing Entity vs. Individual Income**: If you run a business in the US or earn income there, consider whether an LLC, S-corp, or other structure gives better alignment with new thresholds and foreign income exclusions.
- **Canada’s Registered Plans Structuring**: If using RRSPs, TFSAs or other registered investment plans, the upcoming amendments may affect qualification and tax treatment of investments within those. Ensure your entity or trust entity meets criteria when those changes are finalized.
- **Depreciation & First-Year Deductions**: US’ permanent **100% additional first-year depreciation deduction** for eligible property acquired post-Jan 19, 2025, may favor purchasing capital assets rather than leasing or delaying. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-january-2026?utm_source=openai))
## Practical Steps for Structuring Entities
- Do a **jurisdictional comparison**—calculate after-tax profits under US structure vs. Canadian corporation, trust, or partnership.
- Build flexibility into your legal documents to adapt to Canadian draft legislation—especially for investment income and plan eligibility.
- For US business income abroad, confirm foreign tax credits, foreign earned income exclusions, and foreign entity income reporting obligations.
- Consider the impact of increased estate or gift tax thresholds when choosing to gift assets or equity stakes.
## Example
Maria, a nomadic tech entrepreneur, earns $200,000 via her US consulting business and also invests through Canadian registered plans. With US inflation adjustments, her foreign earned income exclusion has increased—reducing her US tax burden. Meanwhile, Canada’s planned amendments may require her PRIF-qualifying investment vehicle to meet stricter tests. She might choose to shift more investments into Canadian RRSPs for now while designing her legal entity as a hybrid corporation operating across both sides for optimized tax treatment.
## Final Word
Global tax law is changing. Ensuring your entity setup works under the latest US inflation measures and the evolving Canadian consultation landscape can make a material difference in aftertax income—for both business profits and investing. Seek advisers who understand cross-border flow throughs, retirement plan rules, and depreciation strategies—so your entity design is ready for implementation when reforms take effect.