Most international groups entering Australia choose a subsidiary: an Australian proprietary company owned by the overseas parent. Registering the overseas company as a foreign company, often called a branch, suits some groups, particularly for short-term projects. The choice affects liability, reporting and how you are seen locally.
The two options at a glance
| Australian subsidiary | Registered foreign company (branch) | |
|---|---|---|
| Legal entity | Separate Australian company | Same entity as the overseas company |
| Liability | Generally limited to the Australian company | The overseas company is directly liable |
| Local officer | At least one director who ordinarily resides in Australia | A local agent who resides in Australia |
| ASIC identifier | ACN | ARBN |
| Annual reporting to ASIC | Annual review; financial reports only in some cases | Financial statements of the overseas company, generally each year |
| Perception | Seen as a local business | Seen as an overseas business operating here |
When a subsidiary makes sense
- You plan to build a long-term business in Australia.
- You want to ring-fence Australian liabilities from the wider group.
- You will employ staff, sign local leases or contract with Australian customers who prefer a local entity.
- You would rather not lodge the parent's financial statements with ASIC, bearing in mind the subsidiary may have reporting obligations of its own.
When a branch can work
- You are delivering a single project or testing the market for a limited period.
- The parent is comfortable being directly exposed to Australian liabilities.
- The parent already publishes its accounts and is happy to lodge them with ASIC.
Tax and other considerations
Both structures are generally taxed on Australian-source profits, but the detail differs, including how profits are repatriated. Transfer pricing, permanent establishment and withholding tax issues should be reviewed with your tax adviser before you decide. Foreign investment (FIRB) approval may also be relevant in some sectors.
Changing your mind later
You can move from a branch to a subsidiary later, but it means transferring contracts, employees and assets. Choosing the right structure at the start usually saves time and cost.
How we help
We advise international groups on the appropriate structure for their Australian presence and then manage set-up, from registration to resident director appointments and ongoing governance. See our guide to setting up in Australia.