The branch and the representative office in Taiwan
Two ways to be present without a subsidiary — neither needs the investment approval, and they are taxed in opposite ways
A foreign company can be present in Taiwan without incorporating anything. It can register a branch, which trades, invoices and pays tax in Taiwan on behalf of its parent; or a representative office, which buys, quotes and keeps in touch with the market but may not earn revenue. Neither is a separate legal entity, and neither needs the prior approval of the Department of Investment Review that a foreign-owned subsidiary requires. This note sets out what each may do, how it is registered, how it is taxed, and when it is the right answer.
What is the difference?
| Branch | Representative office | |
|---|---|---|
| Legal basis | Company Act, articles 370 to 386 | Company Act, article 386 |
| May it trade? | Yes, within its registered business scope: it sells, invoices and earns revenue in Taiwan. | No revenue. It may sign contracts, tender, quote, purchase and negotiate prices for its parent, and gather market information. |
| Capital | Operating capital set aside in Taiwan, verified by a Taiwanese accountant; no general minimum. | None. |
| Investment approval | Not required — unless Mainland Chinese persons hold more than 30 percent of the parent or control it. | Not required, with the same Mainland exception. |
| Tax | Income tax at 20 percent on Taiwanese income; VAT at 5 percent; profits remitted to the head office without withholding. | Outside income tax and VAT while its activity stays within liaison and purchasing; withholding on its staff’s salaries. |
| Liability | The parent answers for the branch’s debts. | The parent answers for the office’s commitments. |
What is a branch?
Since the amendment of the Company Act that took effect on 1 November 2018, Taiwan no longer “recognises” foreign companies before they may act: a company incorporated abroad has, within the law, the same capacity as a Taiwanese company (article 4). What it may not do is carry on business in Taiwan under its own name without first registering a branch (article 371). Doing so is punishable by up to one year’s imprisonment or a fine of up to NT$150,000 (about US$4,600, at NT$32.3 to the US dollar, 16 October 2026), and those who acted are personally and jointly liable for the transactions.
The branch carries the parent’s name translated into Chinese, with its company type and nationality (article 370). The parent sets aside operating capital for it and designates a responsible person in Taiwan (article 372). There is no general statutory minimum for the operating capital, although some regulated activities set their own; the amount is audited by a Taiwanese certified public accountant, whose report may follow within thirty days of the first registration. Once set aside, the capital stays: a responsible person who returns it to the head office faces up to five years’ imprisonment and a fine of NT$500,000 to NT$2.5 million (about US$15,500 to US$77,000).
The 2018 amendment replaced the former “litigious and non-litigious agent” with the responsible person in Taiwan, alongside a branch manager. The statute does not require either to be resident — a passport showing an address is accepted at registration — but in practice the bank, the tax office and the landlord will want someone they can reach in Taiwan, and most groups appoint a resident manager.
How is a branch registered?
Taiwan is not a party to the Apostille Convention. Where authentication is required, the parent’s documents are authenticated by a Republic of China mission in the country where they were issued, or by that country’s office in Taipei, and the authentication is accepted for one year. It is worth ordering them, with their certified translations, before anything else.
How is a branch taxed?
On its income
The branch pays profit-seeking enterprise income tax at 20 percent on its Taiwan-source income, and keeps separate books. Unlike a subsidiary, it is not subject to the 5 percent surtax on undistributed earnings. VAT is 5 percent, and returns are filed every two months even when there is nothing to declare.
On the way home
A branch may remit its after-tax profits to the head office without further tax: there is no withholding, where a subsidiary’s dividend to a foreign shareholder bears 21 percent unless a tax agreement reduces it. For a group that intends to bring its Taiwanese profits home every year, that difference is often what decides the choice.
What is a representative office?
A foreign company that does not intend to set up a branch but sends a representative to Taiwan registers an office with the Ministry of Economic Affairs (article 386). It needs a representative, an address and no capital; the registration fee is NT$1,000 (about US$31). Under the Ministry’s interpretation, the office may sign contracts, take part in tenders, quote, purchase and negotiate prices on behalf of its parent, and it may gather market information. It may not sell, cannot obtain a uniform-invoice number and may not earn revenue in Taiwan. It may employ staff, and withholds tax on their salaries.
An office confined to purchasing, inspection and liaison is outside income tax and VAT. The tax authority has audited offices that did marketing, sales support or technical support for their parent’s customers, and taxed them as service providers. If the office is going to sell, in substance, it should be a branch.
Can either one employ foreign staff?
Yes, on conditions set by the Ministry of Labor for employers of foreign professionals. A branch in its first year qualifies with operating capital of NT$5 million (about US$155,000) or more, or turnover of NT$10 million (about US$310,000), or imports and exports of US$1 million, or agency commissions of US$400,000; after its first year, one of the three activity thresholds has to be met over the last year or the last three on average. A representative office qualifies if it is registered and shows actual work performed in Taiwan. The foreign professional’s salary must be at least NT$47,971 a month (about US$1,485) at the date of this note. Individuals may also come on an Employment Gold Card, which does not depend on the employer; both routes are the subject of the note Working in Taiwan.
What if the parent is a Mainland Chinese company?
A Mainland enterprise, or a company incorporated elsewhere in which Mainland persons hold more than 30 percent or exercise control, may not do business in Taiwan without permission (article 40-1 of the Act Governing Relations between the People of the Taiwan Area and the Mainland Area). A branch needs an investment permit from the Department of Investment Review, then the Ministry’s permission, then registration. An office is allowed only if the parent has operated for three years, has paid-in capital of at least NT$6 million (about US$186,000) and has at least one business item on the positive list of activities open to Mainland investment; its activities are limited to contracts, quotations, negotiation, tenders, purchasing and market research, and research and development is excluded. Permission is refused to investors linked to the Party, the military or the government, or on national-security grounds.
How does one close, or turn into a subsidiary?
A branch that stops trading applies for deregistration, which does not extinguish its earlier liabilities (article 378). When a foreign company deregisters its last branch, its Taiwanese debts are liquidated, its assets may not leave Taiwan until that is done, and debts left unpaid remain the parent’s (articles 380 and 381); the responsible person and the liquidator are jointly liable if those rules are broken (article 382). For tax, a final return is due within forty-five days of deregistration and a liquidation return within thirty days of the end of the liquidation. The Company Act has no one-step conversion of a branch into a subsidiary: the usual route is a new subsidiary, with the investment approval it requires, a transfer of the business, and the deregistration of the branch. An office is deregistered with the authority that registered it.
When is each the right answer?
A branch fits
A group that will sell in Taiwan from the start, wants its profits home each year without withholding, is content for the parent to answer for the Taiwanese business, and prefers to avoid the investment approval — a regional sales or service operation, a project office for a contract performed in Taiwan.
An office fits
A company that buys in Taiwan, manages suppliers, inspects quality or studies the market before deciding to invest — and will not sell. When the activity grows into sales, the office is the wrong vehicle; a branch or a subsidiary takes over.
A subsidiary remains the answer where the business needs its own legal personality — to limit the parent’s liability, take in local partners or be listed; its approval and registration are the subject of the note Taiwan: investment approval and the science-park corridor.
How we work on Taiwan
Lo On Shing does not maintain a Taiwanese establishment. We assess which vehicle the activity needs, prepare and have authenticated the parent’s documents, and coordinate Taiwanese counsel and accountants for the registration and the capital audit; where a branch or an office would be the wrong vehicle, we say so before the costs are committed.
Terms you will meet
| Term | What it is |
|---|---|
| Branch of a foreign company 外國公司在臺分公司 | The registered Taiwanese establishment of a foreign company, without separate legal personality. |
| Representative office 辦事處 | A registered office that acts for its parent without earning revenue. |
| Responsible person in Taiwan 在中華民國境內指定之負責人 | The person the foreign company designates to represent it in Taiwan. |
| Operating capital 營業資金 | The funds set aside in Taiwan for the branch, audited by an accountant. |
| Administration of Commerce 經濟部商業發展署 | The agency of the Ministry of Economic Affairs that registers companies, branches and offices. |