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Expanding your Corporate Presence through branches or subsidiaries

Expanding your business abroad

Your local requirements in a particular territory may become more complex than could appropriately be handled by an agent, distributor or other collaborator and so you might want to consider establishing a local operation of your own. From a marketing point of view, it can help demonstrate local commitment and to improve service to customers. From a tax and legal viewpoint there are various vehicles which may be more or less efficient.

Branch Office : These are easy to set up and close down, they retain the UK company name and are controlled by the UK company. Local laws vary but a branch office normally involves local taxation of branch profits and on the income of its employees, and it requires careful consideration of the remission of profits to the UK. A branch office normally needs to be registered with the local companies registry. Some countries restrict the ownership of property by branch offices

Subsidiary or Joint Venture: This is a separate and distinct corporate entity set up by you alone or as a joint venture with local partners. Consideration has to be given to local regulatory and tax requirements including:

  • accounting procedures;
  • restricting inter-company pricing of materials supplied to a subsidiary;
  • corporate and employee taxation;
  • employee protection legislation;
  • social security legislation;
  • whether there are particular minimum capital requirements.

In all cases, legal and financial advice in the jurisdiction concerned is of prime importance in establishing any such entity.

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