A Quick Guide to Closing Down a Foreign Subsidiary

When a multinational company sets up a subsidiary or branch office in a foreign country, they are expanding to meet business goals, but might not anticipate the steps required if they need to close the branch. Not every foreign venture succeeds, therefore closing a subsidiary abroad should be...

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considered as one possible outcome in researching the new market location.

Reasons for closing a foreign entity could include:

  • Lack of revenue and/or high expenses
  • Concerns about permanent establishment and taxation
  • Security issues due to political changes
  • Changes in markets and customer base
  • Economic slowdowns
  • Increasing reliance on home country operations
  • Immigration and employment compliance issues

The process will differ depending on the location and the degree of commitment to the country. Closing down a fully incorporated entity with many staff will be more complex than shutting a small branch office, and an entity located in a country with adjacent borders will be logistically easier to close than one overseas. However, there are country specific elements that may pose the most daunting challenges, and we will review the steps in a few of the world’s most attractive business destinations.

Universal Steps Involved in Closing Down a Foreign Entity

If you must shut down a foreign subsidiary in any country, you will probably have to... read more

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Tim Burgess

Director, Shield GEO Services Ltd