Bermuda Branch Office
A branch is one way for a company to set up a business in Bermuda. 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 branches tax obligations. We recommend incorporating a company as opposed to registering a branch office.
The disadvantages of a branch office are:
- The parent company is fully liable for the liabilities of the branch
- The branches representatives may be held jointly and severally liable for tax debts
- The financial statements of the parent must be lodged at the Companies Registry
- The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch
- Banks and clients may prefer dealing with a Bermuda 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 has to be provided of the legal existence of the parent
- Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease
The advantages are:
- Less obligations to present accounts than with corporations
Features of a branch office in Bermuda
A resident individual must be appointed as a representative for a branch in its dealings with the tax authorities. It is possible that representatives will be liable for tax debts that the non-resident company may have.
Branches are sometimes useful for low cost projects. However, they are not usually the ideal choice for substantial projects as the branch and parent companies activities are not differentiated, the parent company is fully liable for the branches liabilities.
A Bermuda branch office is not legally separated from its parent company. From a tax point of view, branches are permanent establishments of non-resident companies.
A branch must have the same name as the parent company.
Documents needed for a Branch office
When registering a branch, evidence has to be provided of the existence of the parent. Certified copies of the Articles or Statues, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you need to be provided.
Some documents will also need to be translated, these include:
- Your parent’s registration certificate
- Your company’s articles of association
- 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 has limited liability