Q&A on foreign companies establishing a representative office in Taiwan
Foreign capitals investing or owning a business in Taiwan have the choice of establishing a subsidiary company, branch company, or representative office. Subsidiary companies function the same as any other company in Taiwan with full legal-person status except being funded by foreign capital. Branch companies, on the other hand, remain a part of the parent company and thus do not have legal-person status, but they can conduct business in Taiwan. Lastly, we have representative offices. Those entities have neither legal-person status nor rights to conduct business. They act as a correspondent and play an assistive role to their foreign compan. Foreign companies may choose to establish a subsidiary company, branch company, or representative office depending on their business goals.
Figuring out your next step through legal text could be a daunting task, and sometimes the procedures are not that straightforward. In the previous articles, we have touched on the procedure for foreign companies to establish standalone subsidiary companies and questions relevant to branch companies. Now we move on to representative offices. In the following Q&A, we will go through the funding and functions of representative offices, work permits for foreign managers, and taxation issues. Everything will be as clear-cut as possible.
Establishment of representative offices
1. What is the main differentce between operating a branch company, subsidiary company, or representative office in Taiwan?
Answer: Subsidiary companies have legal-person status, while branch companies do not. But the latter has the rights to conduct business in Taiwan. On the other hand, representative offices have neither of them; such entities can only act as a correspondent in Taiwan to their foreign parent company. The scope of operation of representative offices includes signing contracts, quotation, negotiation, filing for tenders, procurement, market survey, and research activities.
2. How to name a representative office?
Answer: When filing for a representative office, you will need to translate your non-Chinese company name into Chinese and add the term “representative office” and company’s nationality into the name. For a US company named AAA, the full name would be “Representative Office of the US Company AAA in Taiwan”; if that company is of UK origin, it would then be “Representative Office of the UK Company AAA in Taiwan”.
3. Is there a minimum capital requirement for representative offices?
Answer: No. Foreign companies can establish a representative office with no registered capital.
4. Must representative offices be reviewed by Investment Review Committee?
Answer: No. The establishment and funding of representative offices are managed by the Department of Commerce, Ministry of Economic Affairs
5. Must a representative office be registered at a valid commercial address?
Answer: Yes. A representative office has to be registered at a valid commercial address (for which TECL has a line of options).
6. Can a representative office conduct business in Taiwan?
Answer: No. Representative offices are not qualified to perform business transactions.
7. Must a representative office file taxes?
Answer: If a representative office pays salaries or rents, it must file tax withholding for the respective category in January.
8. Can a representative open a bank account?
Answer: Yes. The account can only receive funds from the parent company and pays for its own operation expenses. No other income denominated in NTD is allowed.
9. If the person responsible for a representative office is living abroad, will he/she have to visit Taiwan in person?
Answer: No. Different from subsidiary companies or branch companies, representative offices require no in-person visit to banks or National Taxation Bureau.
10. Can the establishment of a representative be entrusted to a third party?
Answer: Yes. TECL stands ready to help you through the entire process.
11. How long does it take for a representative office to be established?
Answer: It takes about 15 business days.
12. How does a company from Mainland China differ from other foreign companies in establishing representative offices?
Answer: Representative offices of a Mainland company are subject to stricter review and supervision. Those offices must provide an annual operation plan and budget to the competent authority, and it is not the case for offices of other nationals.
Personnel of representative offices
1. What is the personnel requirement for a representative office?
Answer: A representative office of a foreign company in Taiwan must have a designated representative person.
2. Must that representative person be a foreign national?
Answer: No. A Taiwanese can also represent the representative office.
3. If the representative is a foreign national, can he/she apply for a work permit?
Answer: Yes. But only the representative person can apply for a work permit.
4. What is the requirement for a foreign representative to apply work a work permit?
Answer: For an office in the 1st year of its operation, it may apply for a work permit without meeting any requirements.
5. Upon obtaining a work permit, can the foreign representative apply for residency as well?
Answer: Yes. The residency will have the same duration as the work permit.
6. Can the work permit of a foreign representative be extended?
Answer: Yes. But the extension is dependent on if the representative office is operational, meaning if the representative office has been engaging in the legally allowed line of works including signing contracts, quotation, negotiation, filing for tenders, procurement, market survey, and research activities
7. Can the family members of a foreign representative apply for dependent residency?
Answer: Yes. The spouse and minor children can obtain dependent residency.
8. What is the duration of the initial work permit for foreign representatives?
Answer: 12 to 36 months, depending on the official assessment of the representative office’s qualifications.
9. What is the duration of the work permit extension for foreign representatives?
Answer: It depends on the contract duration between the office and the foreign representative. Whether or not the office has legit operation is also taken into account.
10. If a foreign representative continuously reside in Taiwan for 5 years, would he/she be eligible for permanent residency?
Answer: Yes. If a foreign representative resides in Taiwan for more than 183 days a year for 5 consecutive years, he/she will be eligible for permanent residency.
11. Can a foreign representative be enrolled in Labor insurance and national health insurance?
Answer: Yes. But the person cannot participate in the pension program.
Our team comprises Taiwanese and foreign nationals. For over a decade, we have accumulated rich experience in helping foreign entities set up companies in Taiwan. We know what foreign clients need and how to navigate through the regulatory environment. By combining the establishment of subsidiary companies and branch companies, office renal, tax and accounting services into a one-stop service, we strive to make your business endeavor in Taiwan as painless as possible. We have success records with clients from Malaysia, Singapore, Macau, Japan, Korea, Thailand, the US, the UK, Egypt, Vietnam, Indonesia, Israel, India, Australia, Iran, and more.
