A company representation in the EU – initial decision criteria
A company representation or a letterbox company is a branch office, which usually mainly exists only on paper. This means that although there is a legal place of business at the specified location, the parent company does not have to deal with most legal and especially tax issues. The administration of this shell company takes place in a completely different location.
In most countries, a company must provide a so-called summonable address. This means that the postal address serves the purpose that the management of this company can be reached by e.g. postal services. This also makes this kind of company representation or mailbox company legal from a legal point of view.
A distinction must be made between the following organizational structures in Germany:
Subsidiary: The subsidiary is majority-owned by the parent company, but organized as a company under German law (e.g. GmbH, OHG, KG), legally independent and has its own legal personality.
Branch office: An independent branch office does not have its own legal personality and is part of a foreign company. Its services largely correspond to those of the main branch office and it is independent in terms of both space and personnel. A branch office must be entered in the German Commercial Register.
Permanent establishment: A permanent establishment merely undertakes auxiliary business for the main company (e.g. pure production sites, intermediary sites, external warehouses). The company has no legal independence and is completely dependent on the main company abroad. No entry in the commercial register in Germany is required.
Representative office: This branch office is usually managed by an independent trader or a service agency outside the company (e.g. BridgeToEurope as the commercial agent). Typical activities are in the field of contact management, market research, or local support and/or RMA services. This representation is legally completely dependent.
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