A subsidiary works similarly to a branch, providing benefits such as increased international presence, greater exposure globally, and tax advantages.
However, rather than a smaller division of the parent company, a subsidiary is an autonomous company or corporation that is controlled by a parent company. This control is maintained through the ownership of more than 50% of the subsidiary’s voting stock.
With regard to taxation and regulation in the relevant countries, the parent company and subsidiary are deemed to be completely separate entities. As a result the legal liabilities of the parent company are limited only to the capital contributions made to the subsidiary.
The national laws of your chosen country apply to both the subsidiary and parent company. Having a presence in a foreign company can be extremely beneficial in utilising lower labour and production costs, tax reductions and exemptions, and access to new consumer markets.
Subsidiaries within the EU are regulated by the Parents-Subsidiary Directive and a new amendment states that only a minimum 10% share in the subsidiary can be held by the parent company in order to qualify for the available advantages. These include exemption from Withholding Tax and double taxation when the parent company’s tax is imputed against the subsidiary’s tax on profits.
Universal Company Incorporations will help you meet your specific business objectives and requirements through your subsidiary. Our experience with establishing subsidiaries worldwide allows us to make the process simple for you, ensuring you maximise the available benefits and potential that your subsidiary offers.