Zweigniederlassung

A Zweigniederlassung, or branch office, is a location where a company conducts business as part of the same legal entity as the parent company. It is not a separate legal entity; the parent company remains legally liable for the branch’s obligations and activities.

Registration and operation are typically required with the local commercial registry (for example, the Handelsregister in Germany). A Zweigniederlassung usually has its own street address, may maintain separate accounting records for the branch, and is often represented by a local manager or power of attorney. It operates under the name of the parent company and is subject to local regulatory and reporting requirements.

Tax and accounting implications vary by jurisdiction, but a common principle is that the branch functions as a permanent establishment of the parent company. Profits and losses of the branch are generally attributed to the parent for tax purposes, and local taxes such as corporate tax, trade tax, or value-added tax may apply. The branch may be required to maintain separate books, even though it is not a separate legal entity.

Liability and governance in a Zweigniederlassung rest with the parent company. Because the branch is part of the parent, there is no independent legal personality or separate liability shield for the branch itself. Local management handles day-to-day operations, while the parent company retains ultimate oversight and strategic control.

Compared with a Tochtergesellschaft (subsidiary), a Zweigniederlassung offers a simpler, less costly structure but increases exposure of the parent to the branch’s obligations. A subsidiary is a separate legal entity with its own liability and governance, typically providing greater autonomy and potential tax planning opportunities. The choice depends on liability considerations, tax implications, and the desired level of local presence.