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What are the most typical corporate structures used for doing business in a foreign country (e.g. subsidiary)? (Webinar Attendee Question)

This question was asked during the Proformative webinar "Going Global: Expanding Internationally the Right Way."  A video of the webinar can be viewed here: https://www.proformative.com/resources/webinar-video-going-global-expanding-internationally-right-way

Answers

Bill Hite
Title: CEO & Founder
Company: Hull Speed Associates GmbH
(CEO & Founder, Hull Speed Associates GmbH) |

In our experience, at Hull Speed Associates, it is a combination of the company's current structure "corporate structure policy", what the company's future growth plans are, country specific requirements and what is most advantageous from a legal and tax prospective. The more thought put into this in the beginning the less likely it will be that the company will run into problems in the future. Be careful not to over engineer it though.

Topic Expert
Stephen Wares
Title: International Expansion Expert
Company: CCW Business Solutions
(International Expansion Expert, CCW Business Solutions) |

Kurt, the answer is invariably 'it depends'. The choices are usually Subsidiary, Branch or Representative Office / Place of Business but which one is appropriate will depend on a variety of factors including what type of activities are being undertaken on the ground in the foreign country, whether revenue generating activities are being undertaken, whether the local employees can conclude contracts etc. amongst other factors. Generally the subsidiary option is the more expensive one and brings with it a wider range of compliance requirements but does offer the protection of a separate legal entity to the US Parent. Branches and Rep Offices are generally less expensive to establish, operate and close down but do not offer the same level of protection against trading and employment liabilities as a subsidiary does. I agree with Bill that a company expanding overseas for the first time should keep it simple, not over-engineer it but keep an eye on risk.

Topic Expert
International Representative
Title: International Expert
Company: Nair & Co.
(International Expert , Nair & Co.) |

Subsidiary, branch (not available in certain countries), Representation Office (also not available in certain countries). The choice is driven by the materiality of local sales volume (if any), the headcount, the job descriptions and the job titles of the local personnel and how relevant their activities will be to the core activities of your business.

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