Local Subsidiary
Incorporate a separate legal entity in the target country
Definition
A separate company incorporated in the target country and owned by the parent, contracting, employing, invoicing and paying tax locally.
Suited for
- Long-term local operations
- Need for a local contracting entity and local staff
- Regional headquarters
Common legal structures
- Private limited / LLC
- Free zone company where applicable
Preparation
- Check foreign ownership restrictions
- Decide shareholders, directors and registered address
- Notarise and legalise parent documents
- Plan capital injection
Limitations
- Regulated sectors need additional licences
- Some countries require a resident director or representative
Tax notes
- Local corporate and indirect tax registration
- Dividend withholding tax and treaties
- Related-party transactions and transfer pricing
Key risks
- Ongoing compliance cost
- Bank account KYC
- Beneficial ownership reporting
Steps
- 1Decide model and jurisdiction
- 2Confirm licences
- 3Prepare documents
- 4Incorporate
- 5Register for tax
- 6Open bank account
- 7Obtain operating licences
- 8Start operations