If you are looking to expand your company into foreign markets, one of the most important questions you have to ask yourself is whether you want to establish the new territory as a subsidiary, or a branch. This is a crucial part of the planning process in a Global Business Expansion.

Your answer to this question depends on a few factors, such as the opportunities you perceive in the new market, as well as any regulatory or cultural challenges you may want to tackle in your new territory or country. Other questions you may want to ask yourself during this decision time include:

• What is the establishment process like – do you need a legal entity in the country first before setting up other processes, like payroll?
• What is the process for acquiring work permits and residency permits for employees?
• How long will it take for the company to be able to legally do business?

If your questions are more specific to the country you want to expand, we can help you with the Country Guides. If you want to know more about the main differences between these entity types, you can read more about them below.

 

What are the main differences between a subsidiary and a branch?

When deciding on whether you want to open a branch office versus opening a subsidiary company in a new territory, you will need to consider three points:

1. What your primary business interest will be?
2. What your goals are for the entity you choose?
3. How you will handle the taxation and liability?

The requirements for the incorporation of a branch and subsidiary will vary according to the country, but the main requirements include a local address, incorporation documentation, and representatives of the parent company. The requirement for a local bank account also varies according to the payroll laws of the country you are expanding to. Share capital is only required for subsidiaries, but not for branches.