Administrative procedures Successful Investment Uncategorised Which status is most appropriate?Which status is most appropriate?
The liaison office is an operational unit not engaged in commercial activity. It may not conduct any commercial activity, such as prospecting, advertising, information provision or storage. It is not certified to conclude contracts in the parent company's name or on its behalf.
The Office does not have its own legal identity. As a result, it does not own property distinct from that of the parent company, nor does it have its own operating or business name, capital or equity. Should it encounter financial difficulties, the parent company is considered responsible for the relevant debts.
It is subject neither to VAT, nor to corporate tax or territorial business tax. In contrast, it is required to pay resident tax and taxes based on payroll (apprenticeship tax, continuing vocational training, mandatory investments in construction).
Any foreign company wishing to prospect the market and promote the said company without establishing a distinct structure may choose to employ a single sales representative. The said representative may be an employee of the foreign company, a travelling sales representative, a commercial traveller, representative or placement agents (company employee with special status). The travelling sales representative is salaried sales intermediary who visits the clientele of one or more companies, within a specific geographic area. This employee may also address potential clients.
Sales representatives are personally subject to income tax.
Like subsidiaries, branch offices are units established for the long-term by companies wishing to conduct industrial and commercial operations. Headed by a legal representative, branch offices are secondary establishments that carry out the same operations as the foreign parent company. They do not have a legal identity distinct from that of their head office, nor are they legally independent, such that the parent company may be held liable for their actions.
Branch offices are subject to corporate tax and VAT.
A subsidiary is an independent company that may hold one of many legal forms, where the parent company owns more than half of the capital. Subsidiaries are legally distinct from their parent company (the parent company is not responsible for the subsidiary's debts), but remains economically and financially dependent.