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Nantong Jing Abacus Finance & Tax Consulting Co., Ltd.

Contact: Zhang Accounting

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Home > Company News > Are the subsidiary and parent company the same legal entity?

Are the subsidiary and parent company the same legal entity?

Release date: 2019-02-22 Content from: http://jlangstudio.com/

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The difference between Nantong registered company representative office and office:

Offices and representative offices cannot apply for business licenses, are not qualified for business, and cannot sign commercial trade contracts in their own names for profitable trade and investment activities, otherwise the profit agreements they sign are invalid. Its responsibilities are only to contact, understand and analyze market conditions, and participate in business negotiations. Branches and offices have different tax treatments, which are mainly reflected in corporate income tax and turnover tax.

From the perspective of corporate income tax, since the office cannot engage in business activities, has no business income, no profits, and no taxable income, there is no need to pay corporate income tax; for branches, corporate income tax can be paid at the branch office's tax authority. , Or they can be collectively paid by the head office.

From the perspective of VAT, since the office does not engage in business activities, it does not need to pay VAT locally; the branch's business activities must pay VAT locally.

There are many different types of registered companies in Nantong. The more common ones are subsidiaries, branches, representative offices and offices. However, many companies were not very clear about the differences between them when they were founded. The agency specializes in company registration and agency bookkeeping. Today I will explain to you the relationship between each other.

Difference between subsidiary and branch:

A subsidiary is a company that is effectively controlled by the parent company or a company in a series of companies that is directly or indirectly controlled by the parent company. A branch company is a company that exists as a branch of a company. Permanent establishment is synonymous.

Legally speaking, a Nantong registered company has subsidiaries that are independent legal persons, while branches are not independent legal persons. The differences between them are: First, the establishment procedures are different. To establish an independent accounting subsidiary in a foreign country, there are many procedures required to establish. The procedures are complicated and the start-up costs are relatively large. The procedure for setting up a branch is relatively simple and the expenses are small. Second, the accounting and tax payment methods are different. Subsidiaries are independent accounting and tax declaration. The local tax authority prefers branch offices. It is not an independent legal person. The head office calculates the profits and losses and uniform taxation. If there is a profit or loss, the branch and the head office can deduct each other before paying income tax. Third, tax preferences are different. Subsidiaries bear full tax liability, while branch companies only bear limited tax liability. Subsidiaries are independent legal persons who can enjoy various preferential policies including tax exemption periods and preferential policies; while branch companies as non-independent legal persons cannot enjoy these preferential policies.

Because the subsidiary and parent company are not legally considered to be the same legal entity, the losses of the subsidiary cannot be incorporated into the head office's account; while the branch and the head office are the same legal entity, the losses incurred in the operation can be offset with the head office .

Related tags: Nantong Registered Company

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