24 January 2025

A subsidiary is a company that is controlled by another company, which is called the mother company. The mother company owns the majority of the shares of the subsidiary, thus giving it control and decision-making authority over its activities. In fact, subsidiaries are particularly useful in cases of mergers, the so-called ‘reverse triangular merger’, which occurs when a company is formed to become a subsidiary of a mother company, and then that subsidiary acquires another company, resulting in that company being absorbed by the mother company.

A branch of company is a “part” of a company, which is located and operated at a different location from the head office of the main company.

The best way to choose what suits you is to have the whole business plan from the beginning, what is the purpose of the Greek company, what is the initial capital, whether you will refinance the company in the future. The reason why you need to be clear on the above before setting up the company is to avoid paying extra fees, taxes and also to avoid wasting valuable time.

1. Legal entity

    

Subsidiaries are separate legal entities from their mother company; therefore, they have a different corporate form and name.

In contrast, branches are not separate entities and are not independent of the parent company. Therefore, they are not autonomous. Legal entity and independence are a key difference between subsidiaries and branches.

2. Liability

 

Subsidiaries are responsible for its own liabilities and debts, although the Board of Directors of the mother company may take decisions that will affect its course and strategy. On the other side, the branches are fully dependent and the responsibilities/liabilities are borne by the main company. Thus, the legal representative of a branch also acts as a representative of the parent company.

In both cases, the following should take place:

• all documents must have an Apostille (where provided) also need to be officially translated into Greek language,
• the legal representative should have Greek tax number,
• within one month from the establishment of the Greek company, a corporate bank account should be opened.

3. Tax

 

• As regards profit, the branch pays all of them to the mother company without paying a dividend, while the subsidiary pays a dividend.
• Branches do not pay stamp duty if they wish to increase their share capital. In contrast, subsidiaries pay stamp duty because a loan agreement is constituted.
• In both cases, income from the activity of Greek companies is taxed in Greece based on the tax code.

By: Eleni Petrakou

Posted in: Our News