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International Subsidiary Setup
Setting up an international subsidiary allows businesses to establish a legally independent entity in a foreign country while maintaining ownership and control from the parent company. This helps in global expansion, accessing new markets, and optimizing tax benefits. The process involves business registration, tax compliance, banking setup, and local regulatory approvals based on the country of incorporation.
Important
1. Access to Global Markets : Expands business reach beyond domestic boundaries.
2. Legal & Tax Benefits : Takes advantage of tax treaties, lower tax rates, and investment incentives.
3. Limited Liability & Risk Protection : The subsidiary operates as a separate legal entity, reducing parent company liability.
4. Ease of Local Hiring & Compliance : Allows companies to hire employees under local labor laws.
5. Enhanced Brand Presence & Credibility : Establishing a physical presence strengthens trust among international customers and investors.
Documents Required
For Business Registration in a Foreign Country
For Banking & Tax Complianceal
Features
Features & Benefits of International Subsidiary Setup
Multiple Business Structures Available
Requires Compliance with Local Laws
FDI Regulations Apply
Access to Local Banking
International Subsidiary Setup
Eases Market Entry & Global Expansion
Tax Incentives & Business-Friendly
International Hiring & Payroll
Eligible for Trade & Investment Benefits
Can Enter Into Contracts & Business
Comparison with Related Services
| Feature | International Subsidiary Setup | Foreign Branch Office | Representative Office | Export-Import Business |
|---|---|---|---|---|
| Legal Independence | Yes | No (Dependent on Parent Company) | No | Not Applicable |
| Requires Business Registration | Yes | Yes | Yes | No |
| Tax Liability | Yes | Taxed as part of Parent Company | No Tax Liability | Taxation on Imports/Exports |
| Can Hire Local Employees | Yes | Yes | No | No |
| Local Banking Setup | Yes | Yes | No | Yes |
| Compliance with Local Laws | Yes | Yes | Limited | Yes |
| Business Expansion Scope | High | Moderate | Limited | High |
| Approval from RBI/FEMA (For Indian Companies) | Yes | Yes | Yes | No |
| Ideal for | Full-Scale Foreign Operations | Extending Business Operations | Market Research & Representation | International Trading |
Frequently Asked Questions
What is the difference between an international subsidiary and a foreign branch?
A subsidiary is a separate legal entity, whereas a branch office operates under the parent company’s legal identity.
How does an Indian company set up an international subsidiary?
Indian companies must follow FEMA & RBI guidelines, obtain board approval, register the subsidiary in the foreign country, and comply with tax laws.
What are the tax implications of setting up a foreign subsidiary?
Taxation depends on the country, but most subsidiaries pay corporate taxes in the foreign country and may have tax treaty benefits with India.
Can an international subsidiary operate independently from the parent company?
Yes, an international subsidiary is legally separate and can enter contracts, open bank accounts, and hire employees independently.
Do I need a local partner to set up a foreign subsidiary?
In some countries, foreign ownership restrictions may apply, requiring a local partner or investor.
6. How long does it take to register a foreign subsidiary?
The registration process takes between 1-3 months, depending on the country and business structure.
Can a foreign subsidiary repatriate profits to the parent company?
Yes, profits can be legally transferred back to the parent company after complying with taxation and repatriation rules.
What are the best countries to set up an international subsidiary?
Popular choices include USA, Singapore, UAE, UK, Canada, and Germany due to business-friendly regulations and tax benefits.