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04 Understanding tax specifics

Payroll costs

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Companies that set up operations in Greater Montréal can take advantage of Québec’s extremely low payroll taxes.

Shared between employers and employees, payroll taxes are amounts that all employers must pay to the governments of Québec and Canada. They make it possible for employees to access various programs and benefits, such as:

  • the Québec Pension Plan (QPP);
  • the Québec Parental Insurance Plan (QPIP);
  • Employment Insurance (EI); and
  • the Health Services Fund

Revenues from payroll taxes are also used to fund the Commission des normes, de l’équité, de la santé et de la sécurité au travail, Québec’s labour board, which oversees compliance with laws and protects individuals in case of a conflict or an accident.

Competitive rates

Here are three payroll tax calculations (employer portion) based on gross annual income:

Of course, in addition to making all mandatory deductions and contributions, employers can offer their employees benefits such as a group insurance plan (including health insurance) or a pension plan.

The famous “4%” for Québec employees

Under the Act Respecting Labour Standards, vacation pay accounts for at least 4% of earnings and is included in the gross salary of employees paid on an annual basis.

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Alexandre Lagarde

Vice President, Foreign Investment