If you want to turn university or public research into a business in Quebec, the process is more straightforward than many founders think. Quebec has a formal program called the Tax holiday for a new business created to commercialize intellectual property (PI), which helps researchers and entrepreneurs spin research out of universities. There is also a generous tax holiday for new businesses created to commercialize intellectual property. If you set up your startup the right way, you can pay less Quebec corporate income tax for up to 10 years while bringing research to market.
Commercializing university research in Quebec follows a clear set of steps. Knowing these steps early helps you stay eligible for important tax programs.
Most Quebec universities and public research centres own the IP their researchers create. Before forming your startup, you must:
This public research link is a key requirement for Quebec’s IP commercialization tax holiday.
To qualify for the tax holiday, your company must meet these rules:
You cannot reuse an old corporation or buy an existing business. Doing so can make you ineligible.
Your startup’s revenue must come almost entirely from eligible commercialization activities, such as:
If you run side businesses or do unrelated consulting, you may lose eligibility.
One of the best incentives for research-based startups is the Tax holiday for a new business created to commercialize intellectual property.
This tax holiday is only for Quebec income tax. You must still pay federal corporate tax.
To qualify, your startup must:
Visit GrantHub to check your eligibility for Quebec and federal tax programs. This helps you avoid costly mistakes before you launch.
Most successful university spin-offs in Quebec use a similar setup:
This structure supports both commercialization and compliance with tax rules.
Starting operations before licensing the IP
If you do business without proper IP rights, you can lose eligibility and face legal risks.
Mixing in unrelated revenue too soon
If your startup earns money from non-IP activities, you can lose the tax holiday.
Using an existing corporation
The program requires a new company. Moving assets from an old business is closely checked.
Thinking federal tax relief is included
The tax holiday is only for Quebec income tax. You still must pay federal corporate taxes.
Q: How long does the Quebec tax holiday last?
Up to 10 years, as long as your company continues to meet eligibility conditions each year. Ongoing compliance is required.
Q: Does the tax holiday apply to federal corporate tax?
No. It applies only to Quebec corporate income tax. Federal taxes are still payable.
Q: What types of IP qualify for the tax holiday?
Eligible IP must come from research conducted in Quebec universities or public research centres, including work done through employment or academic studies.
Q: Can a company that bought IP from another business qualify?
Generally no. The program is designed for new companies commercializing public research, not IP acquired from an existing private business.
Q: Is the tax holiday considered taxable income?
No, it is an income tax exemption, but it can interact with other Quebec tax credits and incentives. Professional tax advice is recommended.
After the FAQs, it is helpful to know that GrantHub tracks hundreds of active grant and tax programs across Canada, including Quebec measures tied to research commercialization.
Commercializing university research in Quebec works best when your IP, company setup, and revenue model match program rules from the start. Before you incorporate or sign agreements, confirm which tax measures and grants fit your situation. GrantHub helps you check eligibility for Quebec and federal programs, so you can focus on building a successful business.
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