15 March 2025

A subsidiary is a company that is controlled by another, 'mother', company. This 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 the so called 'reverse triangular merger', which occurs when a company is formed exclusively in order to become a subsidiary of an existing mother company. This subsidiary then acquires another company, resulting in that company being absorbed by the 'mother'.

A branch of a company is a 'part' of a company which is located and operated from a different location than its head office.

Which one suits your business depends on your business plan. Questions such as, what is the purpose of your Greek company? What is the initial capital needed and will you need to 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

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

In both cases, the following should take place:

• all documents must have an Apostille (where provided) which also need to be officially translated into the Greek language,
• the legal representative should have a 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 subsidiary pays a dividend to its mother company, while the branch pays all of it to the head office without paying a dividend.
• Subsidiaries pay stamp duty because a loan agreement is constituted. In contrast, Branches do not pay stamp duty if they wish to increase their share capital.
• In both cases, income from the activity of Greek companies is taxed in Greece based on the relevant tax code. 

By: Eleni Petrakou

Posted in: Our News