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Equity movement of a branch

V TEK's Profile
V TEK
Profile
Title: International controller
Company: None
(International controller at None) | Nov 9, 2020

Hi all

How the capital movement should take place between branch and the parent entity? Here I am referring to best practices when it comes to excess cash blocked in the branch?

Thanks

Answers

Topic Expert
Jake Feldman
Profile
Title: Managing Director
Company: Global TaxFin Advisory Group LLC
(Managing Director, Global TaxFin Advisory Group LLC) | Feb 23, 2021

If your question is about blocked funds that cannot be repatriated because of country Central Bank foreign exchange restrictions, this is an old problem that applies equally to a subsidiary or to a branch. Solutions can be divided into those where the asset remains in the sub/branch but is redeployed in a way that hedges/protects from devaluation (usually at high cost) vs. those that remove the asset from the sub/branch. Removal is a function of the exact legal restrictions imposed and the availability of parallel exchange rate asset swap transactions that typically fall into a grey area of local law (and also entail costs).

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