Llary's (almost) Complete Guide to Rep. Office Registration

Thanks a lot for your detailed reply Llary.

So let me get this straight: Your friend set up a branch office and got an ARC through it, with no capital/income requirements? I mean, no min. capitalization for the home company, no min. operating capital for the branch, and no min. revenue?

I’m suspicious only because when I applied for the rep. work permit last month (couldn’t have got going without your posts here!) I was asked for min. home company capital by the CLA, but didn’t have to provide it once I reminded them I was only appling for a rep. permit.

Regardless, I know you are a proponent of setting up a local company instead and it seems like a pretty good idea. But… Are the tax aspects relatively simple? I see it as an accounting nightmare and I don’t have a lot of money to spend on an accountant (nor do I trust them at all, I’ve seen way too many people on here say their accountant told them xyz and ended up getting it in the butt).

Thanks again for all your help!

If your home company is limited by shares (e.g. a regular European ltd. company) then you do have to report the capitalization, but in my case the capitalization was just some nominal value of around TW$150. There are no minimums for foreign capitalization since last time I checked the law.

My personal opinion is that you can test the waters by setting up a rep. office first, then you don’t have any major worries about capital or tax reporting etc. If you find that things are going well or need to make local sales you can always set up a local company later, and since you already have an ARC through your rep. office it doesn’t matter how much capital you have or what the company makes.

If you speak Chinese you should have no difficulty whatsoever dealing with tax and accountants. The tax regime in Taiwan is extremely easy and tax officials are generally quite helpful. Most accountants I have met who specialize in local small businesses have been quite straightforward to deal with. If you don’t speak Chinese or you need assistance with foreigner-specific issues then things get more complicated. I think most issues people have are from miscommunication.

[quote=“Lee Kohl”]since I just completed the process [strike]last week[/strike] end of March, totally unaided except by [strike]your[/strike] llary’s post here,
a buddy and friendly Taiwanese people staffing a dozen govt offices, I’m planning on posting a slimmed down update of this now epic post.[/quote]
Yes, please. :slight_smile: (I’ve visibly edited your comment to set the stage for the new information… :slight_smile: )
I have a limited company and would like to set up a rep office in Taiwan later this year or early next year (for the time being i am busy with studies).
Is there anything i can do to help get the new “how to” file on line here?

Ya, I was all set to write it, but I got totally derailed when I found out, supposedly, that you can open a branch office with zero capital. Which to me makes the rep office totally pointless. There’s an argument that rep office is simpler for tax purposes but honestly whatever minor complexity is added would be well worth the trouble in the majority of cases–if you ask me!

Anyway either way it’s actually a snap to open.

For a rep office:

Your first step is to get a legalized copy of the certificate of incorporation you received when you opened your company. Contact the Taiwan office in your country on what their requirements are in order to perform the legalization–they are the ones who do it, and they will have some other conditions before they’ll accept the document.

The other important step is to find a place to register in Taiwan. Unless you have buckets of cash to rent an office or a very reasonable landlord, this will be the most difficult step. But it’s still really no big deal.

The other steps are trivial. I’ll do my best to actually write the update. Although I’d rather coach you through setting up a branch office and help you write that how to.

[quote=“Lee Kohl”]For a rep office:
Your first step is to get a legalized copy of the certificate of incorporation you received when you opened your company. Contact the Taiwan office in your country on what their requirements are in order to perform the legalization–they are the ones who do it, and they will have some other conditions before they’ll accept the document.[/quote]
OK, i’ll see whether i can start that process next time i’m at home (in a few weeks)…

It looks like that point is already covered… :smiley:

No rush: i’ll send you the draft that i am writing up right now, based on various posts in this thread - then you only need to fix that (i hope :wink: )

Appreciate the offer :bow: , but for the time being my income will come from Japan, so i don’t need a branch office.
(In the future i may set up a separate business in Taiwan to deal with any income-generating work on this side or join an already existing business.)

Anyway, thanks for the quick reply!

I still think a rep office is not a good choice, regardless of your situation. Setting up the branch office doesn’t seem any harder, plus you are allowed to operate locally. What if you suddenly want to be paid by a Taiwanese client in a few months or even a year or two from now? You’ll be happy you did the one or two extra steps to get the branch office, believe me. I say keep if you have options, keep them open! I feel like a <> retard for opening a rep office and am facing either opening a local corporation or upgrading to branch office.

OK, then, can you tell me this, briefly:
If i wanted to set up a branch office, what information about my business would i have to deliver? (capital? turnover? profit? taxes paid? employees? other information?)
Would i have to file a tax return in Taiwan even in the case i receive no money here? Would i have to hire, or contract with, an accountant in Taiwan?
Thanks…

Unless your business is too complex to manage yourself, I highly doubt an accountant would be required. Other than capital, which according to Llary can be as little as TW150, I don’t think you have to report anything.

I’m mostly speculating though. If you speak Chinese then I suggest a little trip to the MOEA, they are super helpful and very free during business hours. They are really really helpful there, I myself will likely be going this week. That and the EVTA/CLA, to ask if you can really get a work permit with no capital requirements.

Llary also makes a fairly good point, which is you could open a rep office and a local company as well. If your country has an onerous tax system it might be a good choice.

My business is not complex, so if there is no legal requirement to hire anybody, i should be able to do everything myself.
Concerning the other open questions: i will await the results of your research. :wink: But i’ll also try and see whether we have any of those offices here in Hualien (if i need language help i can find it, so even though my Mandarin is rudimentary at this stage, no worry along those lines).

About the long-term future: i don’t think that having to deal with cross-border paperwork, accounting, etc., on the long run is going to be pleasant enough for me to want to do it - better live in two worlds and open a second company on this side of the water, once the need arises. :slight_smile:

Opening up a local company is super easy once you already have your rep. office + ARC, any old CPA will do it for a few thousand. I wouldn’t sweat it.

You are perhaps missing a very important advantage to opening a branch or rep. office - you do not need to prove any minimum income or investment to maintain your ARC.

There are also tax advantages to running a branch office structure but you should talk about that with a tax professional.

[quote=“yuli”]If i wanted to set up a branch office, what information about my business would I have to deliver? (capital? turnover? profit? taxes paid? employees? other information?)
quote]

You have to report your Taiwan branch income to your foreign company, but not the other way around. To establish the branch office initially you really don’t need much at all, just some of the documents you would have been given when forming your foreign company (company certificate, list of shareholders etc.).

I think i got that - was talking not about my own income but date about the turnover/ business volume/ etc. of my company - that is also irrelevant (not needed for documentation) then? :slight_smile:

[edited]

It seemed all clear at first, but now you two have confused me. :wink:
I read here that getting a branch office has become easier recently, but why does that mean that it has become more meaningful/ useful/ desirable to have one? :slight_smile:
Are we on the speculation level (looking into the future)about branch office advantages, or has anybody done the branch office registration and got it to work?

To get my feet back on the ground, may i ask for some data - kindly give me a “right” or “wrong” or “don’t know” on the following assumptions:

  1. Opening a rep office requires less paperwork than a branch office
  2. Since all income that is related to my business in Japan would continue to come from Japan (not from Taiwan), there is no reason to have a branch office
  3. If i open a rep office i will not need to deal with tax forms in Taiwan (since there is no possibility of income in Taiwan), but if i open a branch office i will need to file with the tax office every year, even if my income from Taiwan is zero.
  4. Assuming that i may eventually find income in Taiwan (from other activities that are not related to my business in Japan): in that case it would be best to set up a company here for that purpose.

OK…

Thanks & thanks in advance. :bow:

Be aware too that there have been reports that the government might check you’re really running a proper rep office, so you might think about looking for some actual Taiwanese clients. Not sure how reliable the sources are but it seems reasonable.

Of course, it is in my view not only reasonable but should be expected that the authorities may wish to see proof of legitimate activities. Thanks for mentioning it - it will perhaps deter people who shouldn’t be doing this… :wink:

In my case the entities (administrations, organisations, companies) that we call “clients” - meaning, the entities that pay - would be on the Japanese side, and my job would be to approach, and make connections with, Taiwanese entities that my clients are interested in. These activities are, of course, already documented (recorded) for accounting purposes, so i think anybody authorized to audit my activities would be able to satisfy their need for information without me having to take any extra measures. :slight_smile:

And here are all the answers: jusregal.com/English.htm :smiley:
(and in case English does not work: jusregal.com/japan.htm :wink: )

No more confusion - a representative office it is for me :bow:

You say you’re approaching clients and making connections. That’s doing business, you’d need a branch office to be legal. The rep office work permit doesn’t allow doing business (營業).

I don’t understand what you mean, sorry - can you look at these quotes from previous posts and tell me what i can and can’t do as a representative of a company that is located in Japan and pays my salary?

Edit: One point i should perhaps add: unlike your business, mine does not sell any products but provides services (liaison and representation, planning support, gathering and structuring information, interpretation, translation, etc.).

About documenting why one wants to be in Taiwan:

[quote=“llary”] (post dated Jan 23, 2009)
[b]To sum up, a representative office is just that - an office that legally represents your foreign company. So the sort of stuff that office should be doing is e.g. visiting factories in Taiwan; signing contracts with suppliers; advertising for customers in Taiwan; liasing between head office and Taiwanese customers; opening company bank accounts etc. etc. Stuff that the office should NOT be doing is e.g. selling product to Taiwanese people or businesses; making local sales under the rep. office name with the rep. office UBN[/b[/quote]
How to do that:

[quote=“llary”] (post dated Jan 19, 2010)

[quote=“TheLostSwede”]With a rep office it depends, I got two years, some get one year.
You have to prove that you have a reason to be in Taiwan with a rep office, that’s about it, as a rep office is not a profit seeking enterprise, as in it is not allowed to make any money.
How you prove that you have a reason to be here is a different matter.[/quote]

That part is not so difficult, you just need someone with a Taiwanese business or organisation to sign something that says you will do business together for at least 3 years. Then you write a brief statement saying that you need to be in Taiwan to support that customer/business partner on behalf of your company and that is sufficient for a 3 year ARC. I understand that this part is more difficult for someone who just landed in Taiwan, but anyone who has been here for a few years should have hundreds of contacts who could help out with this.[/quote]
This was contradicted:

[quote=“Opihiman”] (post dated Jan 23, 2010)
When I formed my Rep Office, they specifically told me that Llary’s way, of providing a contract with a Taiwan company, thereby enabling/inducing the MOEA(?) to write a letter exempting him from work permit (or some such) - that this was an exception they were not entirely happy about, and were not keen to repeat. I don’t recommend going this route, though you might pull it off.

The simple solution is to draw up an employment contract through which the parent company employs the Rep, laying out his duties, responsibilities, limitations, and compensation. It is not that hard. It can amount to writing your own employment contract, given the Rep also controls the parent. You can understand, it is the only way Taiwan ensures it gets some taxes from the Rep’s activities, i.e. through personal income taxes.[/quote]

I posted this somewhere in the thread already but here it is again. The MOEA said to me in an email:

依本部92年10月29日經商字第 09202221350號函略以,公司法第386條 規定:「外國公司無意在中華民國境內設 立分公司營業… …派其代表人在中華民國 境內為業務上之法律行為時…」所稱「業 務上之法律行為」,實務上,除簽約、投 標、報價、採購外,尚包括議價

Estimates, purchasing and contracts are all you can do. Branch office man! It’s like one extra step!