Representative office: A representative office is the easiest to set up and can allow employees in your organization to establish contacts at a new location. You can use a representative office to promote your business, but in most countries you can`t transact or enter into contracts with customers. Simply put, if it brings you profits, a representative branch will not reduce it. Since a branch is not a separate legal entity, the parent company generally retains all control and responsibility. There will usually be no joint ownership between the two, which means the responsibility stops with your organization. However, in some places, this is not the case. In Brazil, for example, company law breaks the relationship between branches and parent companies, allowing branches to conclude contracts in their own name without the parent company controlling the agreement. Two ways for a foreign company to do business in Singapore are to register a branch and establish a limited liability company in Singapore. Below, we present a brief comparison of the main differences between a branch and a subsidiary in Singapore. Your business is growing and the company wants to expand its presence in another country.

But before you settle down, you need to make an important decision: what kind of legal presence do we want to have? The decision between a representative office, branch or subsidiary results in significant tax, liability, compliance and operating costs. The most important thing you need to know about a foreign branch is that it is part of the primary parent organization and is not its own legal entity. There are two options here, representative or branch. Even when it comes to naming the office, some governments force a link with the parent organization. For example, in China, the name of your branch must include the nationality and Chinese name of the parent company and have the suffix “representative office”. If you wanted to hide the relationship with your main organization, it would be impossible in China with a foreign branch, but easy with a subsidiary. This model also means you don`t have to worry about the limitations (and liability) of an agent or branch, and you can start transactions and contracts without long setup or registration delays. When the local partner becomes an employer, they are also responsible for compliance and take on much of the responsibility on your behalf. At Papaya Global, we are the only payroll solution that can handle your entire global workforce, from full-time employees to contractors to employer of record agreements. If you want to expand internationally, we can advise you on the right choice for your needs, whether it is to open a representative office or branch abroad, to use an employer of reference solution or to register a foreign subsidiary directly.

Business is booming and you`re ready to expand your business to a new location. If you find yourself in this scenario, one of the first questions you need to ask yourself is whether to open a foreign subsidiary or whether a local representative office or branch is better for your needs. There are many differences between branches and subsidiaries, among which it is important to note the following differentiators: Singaporean subsidiaries must appoint at least one locally resident director in their company. You must also appoint a local company secretary. For branches, they must appoint at least two local representatives to represent the foreign company or branch before government authorities in Singapore. The main advantage of opening a foreign subsidiary over a branch is the separation of liability and risk between your parent company and the new office. For example, local compliance issues don`t affect your head office, as you would if you had a branch for which you were ultimately responsible. A branch is considered an extension of the parent company and not a separate legal entity.

Therefore, their responsibilities extend to the parent company, meaning that the parent company can be sued in Singapore. The problem was that there is no uniform definition of what constitutes a branch! We decided to take the following actions: On the other hand, the biggest challenge when using a foreign subsidiary is that you have larger tax liabilities because you have to report the subsidiary separately as a separate entity. With a single branch – You can usually use the same tax return and benefit from tax agreements that prevent you from paying double taxes in both locations. There are several legal options for starting a business in a new field. The simplest option is to create a dependent permanent establishment. On the other hand, a branch could be registered in the commercial register. Finally, a new company can also be created. 1. Advantages and disadvantages of a permanent establishment According to the definition in § 12 AO, a permanent establishment is “any permanent establishment or place of business which serves the business of a company”. Like what. the place of administration, branches, offices and warehouses.

A permanent establishment depends on the principal place of business of the enterprise, i.e. there is a uniform business activity only in physically different locations. Another characteristic of a permanent establishment is that invoices are issued only in the name of the head office. A permanent establishment must be registered with the responsible trade office. Registration in the commercial register is not required. It should be noted that these offices cannot operate their own business, which is different from the headquarters. In addition to the company name, the registration court of the registered office with the number of the commercial register must be indicated on the commercial letters. The income generated by the permanent establishment is subject to limited income or corporation tax. The profits of the permanent establishment are also subject to business tax. 2. Advantages and disadvantages of a branch A branch independent of the head office is called a branch.

However, it is not a separate legal entity from the head office. It is legally and organizationally part of the company from the registered office and is therefore subject to the law of the registered office. However, despite this internal dependence on the head office, it participates independently in business transactions. Typical characteristics of a branch at a glance: There must be a spatial separation of the headquarters. The branch must be organised in such a way that it can participate independently in business transactions, i.e. it must be able to continue to exist after the main branch has ceased to exist. This can be ensured primarily by separate accounts. It conducts typical activities of the whole company, but not necessarily all similar companies, and not just ancillary or management companies.

The branch must have a certain autonomy, since it has its own management with its own freedom of disposal and its own commercial assets allocated by the head office. The operations of the branch are presented separately in the balance sheet of the main branch. A branch is created by the very process of its creation. Registration in the commercial register of the registered office is required. The name of the branch may or may differ from the name of the head office, in which case a reference to the branch is mandatory. According to the definition of § 12 of the Tax Code, each branch is also a permanent establishment, which is why a business must always be registered with the trade office of the respective municipality for the establishment. The income generated by the branch is subject to limited liability tax. The profits of the branch are also subject to business tax.

Singaporean subsidiaries are required to file their own books, income statements and balance sheets when filing annual reports in Singapore. However, branches may also be required to submit the audited accounts of the parent company, as they are only an extension of the head office abroad. A representative office (RO) is the simplest but most limited form of setting up a business in a country.