A branch office is not a separate company but an extension of the foreign parent operating in another country. Unlike a subsidiary, the branch has no legal personality distinct from the parent. This creates different liability and tax implications.
Legal Status
Branches are registered representations of foreign companies rather than local legal entities. The parent company remains directly liable for branch activities. Some countries restrict what activities branches can perform or require them in regulated industries.
Employment Through Branches
Employees of a branch are technically employed by the foreign parent company operating through the branch. Local employment law still applies to employees working in that country. Payroll, benefits, and compliance requirements follow local rules.
Branch vs. Subsidiary
Branches are simpler and cheaper to establish than subsidiaries but expose the parent to direct liability. Tax treatment varies by country. Some companies start with branches for initial market entry, then convert to subsidiaries as operations grow.