Opening a Seychelles Branch of a Foreign Company
A branch is one way for a company to set up a business in Seychelles. However, opening a branch has many drawbacks, mainly that the foreign parent carries full liability for the branches operations and that lengthy and complicated dealings with the tax authorities may be needed regarding the tax obligations of the branch.
The disadvantages of a branch office are:
- The parent company is fully liable for the liabilities of the branch
- The representatives of the branch may be held jointly and severally liable for tax debts
- The financial statements of the parent must normally be filed at the Companies Registry
- The obligations of the branch are the same as those of the parent, including filing VAT returns, employee returns and corporation tax returns - meaning that there are few savings in administering a branch
- Banks and clients may prefer dealing with a Seychelles company rather than a foreign branch
- A branch is rarely ideal for substantial projects because the parent company runs the entire risk
- Upon registration of a branch, evidence of the legal existence of the parent has to be provided
- Any public act by the branch is likely to need ratification by the board of the foreign parent.
In terms of administrative ease, if your company is to sign contracts in front of a notary on a regular basis, it makes more sense to form a new one rather than establish a branch office. Also, with the introduction of the European Company - the Societas Privata Europaea (SPE) - there will be less need to establish branch offices
The advantages are:
- Less obligations to present accounts than with corporations
- A branch is usually an adequate vehicle for low risk projects
Features of a branch office in the Seychelles
A branch is usually suitable for low cost ventures. However, it is not the ideal choice for substantial ventures because the parent company and the branch carry the same and shared risk and therefore the parent is fully liable for the liabilities of the branch.
From a tax point of view, branches are permanent establishments of non-resident companies, and a Seychelles branch is not a separate legal company from its parent.
A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities which they represent.
To register a branch, evidence of the parent company's existence has to be provided, as well as certified copies of the Articles or Statutes, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you.
Various documents will need to be translated, including:
- your parent company's registration certificate
- Your company's articles of association
- The names of the company's directors and secretary
After your branch is registered
All stationery, order forms and similar documents used by your branch are required to show:
- The place of registration of the parent
- The number with which it is registered
- The legal classification of the company
- The address of its registered office
- The place of registration of the branch, and its registration number
Also, the following particulars must be shown at the branch office:
- The company name
- The name of the country in which the company is incorporated
- The parent of the branch having limited liability