Subsidiary vs. Branch in Singapore: Making the Smart Choice for Your Business Expansion

Expanding your business into Singapore? Congratulations! You’re stepping into one of the world’s most business-friendly environments. But before you dive into company incorporation, there’s a crucial decision to make: should you set up a subsidiary company or a branch? Let’s break it down in simple terms and help you make the best choice for your business future.

The Basics: Subsidiary vs. Branch

Think of a subsidiary company as your company’s independent child in Singapore – it’s got its own identity and can make its own decisions. A branch, on the other hand, is more like a long-distance extension of your existing business – it follows the house rules set by the parent company.

Subsidiary:

• A separate legal entity
• Can do its own thing (business-wise)
• Can be 100% yours or have local ownership
• No withholding tax on dividends

Branch:

• An extension of your existing company
• Sticks to what the parent company does
• 100% owned by the head office
• No withholding tax on remitted profits

Company Setup Requirements in Detail

Subsidiary:

• At least one shareholder (individual or corporate)
• At least one resident director
• A company secretary within 6 months of incorporation
• A registered office address in Singapore
• Minimum paid-up capital of S$1

Branch:

• At least one authorised representative who is ordinarily resident in Singapore
• A registered office address in Singapore
• Certified copies of the parent company’s registration documents
• A certified copy of the parent company’s latest audited accounts
• A declaration of solvency or copy of the latest audited accounts of the parent company
• A copy of the resolution from the parent company authorising the setup of the branch in Singapore

✅ Need help setting up your company? Our team of experts at Counto is ready to dive into the specifics of your business and help you choose the best business structure that leads to success. Learn more about our cost-effective company incorporation packages here. 

Pros and Cons of Incorporating a Subsidiary vs. Branch

Subsidiary Company

👍 Pros:

• Your Singapore business is its own boss
• Liability is limited to what you’ve put in
• Easier to get investors on board

👎 Cons:

• More paperwork and compliance costs
• Need local resident directors

Branch

👍 Pros:

• Simpler to set up
• Head office keeps direct control

👎 Cons:

• Your main business is on the hook for any issues
• Stuck doing what the parent company does

Making Your Decision

Incorporating a subsidiary or a branch isn’t just a coin toss. It depends on your:

• Long-term business goals
• Desired level of control
• Risk tolerance
• Budget for setup and compliance

Summary

At Counto, we’ve guided countless businesses through the company incorporation process in Singapore. While a subsidiary offers more flexibility and protection, a branch can be a great way to test the waters in Singapore with less initial investment.

Using a company incorporation service as an extension of your team

Here are some articles you might find helpful:

Registering your company in Singapore 

SSIC codes

Shareholders’ agreement 

Nominee director