The formalities of incorporation include a foundation deed and a memorandum of association, often drafted by a notary public. These documents are often to be publicized. Moreover, minimum capital requirements will often be applicable and registration taxes (calculated on the capital amount) due. And obviously, the company will have to be registered at the companies/commercial registry, will need to apply for a business license, a tax registration (corporate tax, VAT, customs …) and social security (employment).

• A (board of) administrator(s) will have to be nominated in the statutes or by the general assembly and an inspector of the accounts may have to be nominated depending on the size of the company.
• Income taxes will be due similarly to national companies (a subsidiary is a resident company for tax purposes).
• The profits and losses of a subsidiary are not for the account of the mother company. Profits will have to be established at the end of the fiscal year, taxes will be applicable and after that, the net result may be paid as a dividend to the mother company/shareholder. These dividends may again be subject to a (withholding) tax that may or may not be limited in application of a double taxation agreement.  
• As a rule, a mother company (shareholder) will only be liable for the activities of its subsidiary to the extent of the capital invested therein. A bankruptcy of a subsidiary will not otherwise affect the assets of a mother company/shareholder.

The “Doing Business”-website of the World Bank (www.doingbusiness.org)   under the heading «  Starting a Business » presents a summary of the formalities for creating the equivalent of a limited liability company in 183 countries and regions of countries of the world (including a cost and delay estimate) This information is annually updated.

• The formalities of setting up are relatively simple: no founding document, no memorandum of association and no minimum capital requirements. Registration taxes will be limited or inexistent. All in all, a simple registration at the commercial registry (business license) and the application of a VAT (and customs) registration code will be sufficient.
• Administration and control over the accounts is usually assigned to a representative of the head office. In most situations there will be no requirement to appoint an external auditor of the accounts.
• The direct tax rate (corporate taxes) applicable to branches (non-residents) may in certain countries be higher than the rate applicable to resident companies. Non-residents often have less possibilities of deduction (minimum profits determined on a fixed basis).
• The profits and losses of a branch enter directly into the accounts of the head office.
• The head office will have unlimited liability regarding the obligations of its branches (losses, product liability, etc.).

• There is no need to create a separate legal entity. A simple registration at the company registry office (chamber of commerce) will often do.
• The exporter can continue to invoice in euros and the contracts, as they remain ‘foreign’, may be submitted to foreign/international law and the competence of foreign courts or international arbitration.
• Under double taxation agreements, a rep office will not qualify as a permanent establishment and will thus not be subject to income taxes (direct taxation) in its country of establishment.