Setting Up a Company in Taiwan: Subsidiaries, Branches, Representative Offices, Procedures, and Work Permits

The ways in which Korean companies and sole proprietors enter the Taiwan market vary with the nature of their business, including manufacturing, distribution, information and communications technology, and professional services. Even when the common goal is to start a business in Taiwan, the legal arrangements that must be prepared will differ depending on whom the business contracts with, through which entity it earns revenue, and who performs the work locally.

Company formation, foreign-investment review, bank accounts, taxation, business premises, work permits, and residence procedures are interconnected, but they are not the same process. Completing company registration does not mean that investment-fund verification or every industry-specific license has been completed, nor does it allow a shareholder or manager to begin working in Taiwan immediately.

It is therefore safer to consider the business model, the locations of the investors and head office, anticipated transactions, fund flows, staffing, and business premises together from the outset. This article first distinguishes the available forms of presence in Taiwan and then explains the general process for forming a subsidiary, preliminary checks concerning the business activity and premises, work permits and residence for foreign nationals, capital issues, and key taxes.

1. Choosing a Taiwan Presence: Subsidiary, Branch, or Representative Office

A Taiwan subsidiary (limited company or company limited by shares) is a separate legal entity under Taiwan law. A Taiwan branch of a foreign company is not a separate legal entity; it operates in Taiwan as part of the foreign company. A representative office may not conduct profit-making business in Taiwan; its activities are limited to liaison work and legal acts on behalf of the foreign company. Liability, tax treatment, licensing requirements, and eligibility for government procurement must be evaluated based on the chosen structure and the circumstances.

A Taiwan subsidiary (有限公司 or 股份有限公司) is a legal entity separate from its head office and enters into contracts and holds rights and obligations in its own name. The choice between a limited company and a company limited by shares should take account of the equity or share structure, corporate organs, decision-making arrangements, and financing plans. Separate legal personality does not mean that every liability is invariably confined to the subsidiary, so individual arrangements such as guarantees, security, contracts with the parent company, and directors’ liability must also be examined.

A Taiwan branch of a foreign company is the organization through which the foreign head office conducts business in Taiwan. A branch has no shareholders of its own, and because it is part of the head office rather than a separate legal entity, the head office bears the branch’s debts and liabilities. Fund transfers and remittances of profits between the head office and the Taiwan branch, as well as their accounting and tax treatment, should not be assumed to follow the dividend structure of a subsidiary.

A representative office is a base for activities within the permitted scope, such as market research, liaison work, negotiation support, and legal acts on behalf of the foreign company. It may not engage in business activities such as selling goods or providing services in Taiwan. If its actual work expands to taking orders, receiving payments, or repeatedly providing services, the business should look beyond the representative-office label and reconsider whether a subsidiary or branch is required.

When comparing organizational forms, the business must therefore consider not only the scope of liability but also the capital structure, profit distributions and remittances, taxation, industry-specific licensing, employment relationships, and requirements for participation in government procurement. If a particular tender or license requires a Taiwan legal entity, specified capital, a performance record, or registration, eligibility should be determined from the applicable law and notice rather than from the organizational label alone.

The Taiwan–Korea Income Tax Agreement entered into force on December 27, 2023, and applies from January 1, 2024. When the requirements for applying the agreement are met, the maximum source-country rate for dividends, interest, and royalties is 10% in each case. Business profits are generally taxable only in the residence jurisdiction unless, among other circumstances, the enterprise has a permanent establishment (PE) in the other jurisdiction under the agreement, but the manner in which the business is actually conducted must be examined first.

Under the agreement, a PE may include fixed facilities such as a place of management, branch, or office; a construction project lasting more than six months; services performed for more than 183 aggregate days in any 12-month period; or an agent who repeatedly exercises authority to conclude contracts. These four categories have different conditions, and the existence of a fixed place or an agent’s activities must be assessed independently of the number of service days. The existence of a PE and the taxation of business profits therefore should not be determined from the 183-day figure alone.

2. Key Steps in Forming a Taiwan Subsidiary

Forming a Taiwan subsidiary generally begins with preliminary review of the company’s Chinese name and registered business activities, followed by foreign-investment review, opening an account and remitting funds, verification of the investment amount, company registration, and tax registration. The list below is an overview of the overall process and does not represent a fixed sequence or timeline that applies in every case.

1. Preliminary review and reservation of the company’s Chinese name and registered business activities

2. Notarization or authentication of foreign documents, including powers of attorney, and Taiwan overseas-office authentication where required

3. Foreign-investment application to the Department of Investment Review, Ministry of Economic Affairs (MOEA), where applicable

4. Opening a preparatory bank account

5. Remittance of foreign investment funds

6. Investment amount verification (投資額審定)

7. Company registration

8. Tax registration

9. Conversion of the preparatory account into a regular company account

10. Additional import-export, industry-license, work-permit, or residence procedures, where applicable

Preliminary review of the company’s Chinese name and registered business activities is the stage at which the proposed name and business are checked before registration. Passing that review does not mean that a separate license required for the business has already been obtained or that operations may begin immediately at the proposed premises. When a foreign-investment application is required, the investor, investment amount, investee, and business plan should be consistent with the review materials.

Documents executed abroad, such as powers of attorney, certificates of corporate existence, and documents confirming representative authority, may require notarization or authentication, or authentication by a Taiwan overseas office, depending on the place of issuance and the nature of the document. The translation, the identity of the authorized signatory, and the corporate name should also be checked for consistency with the application. Because the required documents may vary with the investor’s nationality and whether the investor is an individual or a legal entity, it is efficient to identify the validity periods and authentication route before obtaining the documents.

A bank may verify the beneficial owner and source of funds as part of its customer due diligence when the preparatory account is opened and the investment funds are remitted. If the remitter, purpose of remittance, approved investment, and receiving account do not correspond, further explanation or correction may be required. After remittance, the actual investment amount is verified, company registration and tax registration are completed, and the preparatory account is converted into a regular account in accordance with the bank’s procedures.

The order, necessity, and duration of the procedures vary with the organizational form, investment amount, industry, substance of the review, progress of the bank’s procedures, and any requested corrections. Some procedures take place after company formation, including import-export registration, permits concerning factories, products, or professional industries, and applications for foreign-national work permits and residence. When setting a contract date or business commencement date, the company should consider not only company registration but also the time required to complete these follow-up procedures.

3. Checking Business Activities and Premises Before Formation

Many industries are open to foreign investment, but prohibited or restricted industries, professional qualifications, restrictions on business premises, and industry-specific licenses must be checked separately. In fields such as medical devices, alcohol, travel, construction, and professional services, where approval or registration by a regulatory authority or a professional qualification may be required, the applicable rules must be assessed by reference to the products and services actually offered and the transaction structure.

The fact that a business activity can be listed in the company registration does not mean that the company may begin that business immediately. Preliminary review of the company name and registered business activities, company registration, tax registration, and industry-specific licensing serve different purposes. The required registrations and liabilities may also differ depending on the operating model, such as online sales versus a physical store, importing versus domestic distribution, or direct services versus intermediary services.

The company’s address is not merely a place to receive mail; it is the basis for registration, taxation, and actual operations. Before entering into a lease, the company should check the land-use classification, building regulations, lease terms, and suitability for tax registration in relation to the proposed address and business activities. If the building’s permitted use or management rules are incompatible with the actual business, or if the necessary landlord consent cannot be obtained, the company may have to relocate or complete additional procedures even after registration.

Taipei City operates an advance inquiry for business premises (營業場所預先查詢) for company and business registrations within its scope. The result of that inquiry alone, however, does not establish compliance with other licensing requirements or the requirements of laws governing professional activities. For premises in another locality, the company should confirm the procedures of the relevant local government and competent authority and should obtain written confirmation of the premises’ suitability before entering into a long-term lease or investing in facilities.

4. Work Permits, Residence, and Capital

The applicant for company formation, a company shareholder, the person who actually works in Taiwan, and the residence applicant may be the same person, but they must be treated as legally distinct roles. This is because investment approval reviews the inflow of capital, a work permit reviews a foreign national’s performance of work, and an ARC reviews the purpose and duration of residence.

Company Formation, Work Authorization, and Residence

Forming a company does not by itself confer work authorization or residence status. A foreign national who will manage or operate a business in Taiwan must meet the applicable work-permit requirements concerning the proposed role, the investment relationship, and the employer’s business performance, and must separately apply for an Alien Resident Certificate (ARC) appropriate to the purpose of residence after obtaining the work permit.

Students may also apply to invest and form a company. Becoming an investor or shareholder, however, does not mean that the person’s current immigration status permits employment or company management in Taiwan. A person who will actually enter into contracts, direct employees, or handle day-to-day management should determine the applicable work-permit category and requirements before beginning work.

Work-permit review may consider the applicant’s duties and qualifications, role in the company, investment relationship, the employer’s business performance, and the submitted materials as a whole. Even after a work permit is granted, an ARC must be applied for separately in accordance with the purpose of residence, and the validity period and renewal requirements of each authorization must be confirmed from the relevant disposition and the law in effect at the time.

Company Capital and Work Permits for Foreign Managers

Taiwan does not impose a generally applicable statutory minimum capital requirement for company formation. Industry-specific capital requirements, the reasonableness of the business plan, bank review, and employer-qualification rules for work permits must be assessed separately. The foreign-manager work-permit category for a foreign-invested business covers, among others, the manager (經理人) of a company in which overseas Chinese or foreign investors collectively hold more than one-third of the issued shares or total capital, the manager of a Taiwan branch of a foreign company, and the representative of a representative office. For a company or branch established for less than one year, the employer generally must satisfy at least one of the following: paid-in capital or Taiwan working capital of at least NT$500,000; revenue of at least NT$3 million; import-export performance of at least US$500,000; or agency commissions of at least US$200,000. For a company or branch established for at least one year, the employer generally must satisfy at least one of the following, measured by the most recent year in Taiwan or the average of the preceding three years: revenue of at least NT$3 million; import-export performance of at least US$500,000; or agency commissions of at least US$200,000. A representative office established for at least one year must have a record of activities in Taiwan; this requirement is waived if it has been established for less than one year. Special approval may be available where the business makes a substantial contribution to Taiwan’s economic development or special circumstances exist.

The figures above are employer-qualification requirements for a foreign manager’s work permit, not a universally applicable minimum capital requirement for company formation. Industry-specific laws may require separate capital or security deposits, and a bank may independently review the business plan and transaction risks. Satisfying the thresholds above also does not result in the automatic issuance of a work permit. Other requirements, including the applicant’s actual duties, experience, and submitted documents, are reviewed as well.

The spouse and minor children of a foreign national who has obtained an ARC based on a work permit or similar authorization may separately apply for dependent residence if they meet the applicable requirements. Documents proving the marital or parent-child relationship, support, and purpose of residence may be required, and family members do not receive residence status automatically.

As a general rule, an ordinary foreign national applying for permanent residence must have lawfully resided in Taiwan for five consecutive years and for at least 183 days in each year, among other requirements. Different calculation rules may apply to foreign professionals and others, and additional statutory requirements concerning conduct, assets or skills are also reviewed. Periods excluded from the calculation of permanent-residence eligibility and the requirements in effect when the application is filed must be checked individually; merely holding a work permit or ARC for five years does not automatically confer permanent residence.

5. Taxes and the Taiwan–Korea Income Tax Agreement

Taiwan’s general business tax rate is 5%, and returns are generally filed every two months. The general profit-seeking enterprise income tax rate is 20%, although actual liability depends on taxable income and the applicable rules. Under Taiwan domestic law, dividends paid to a nonresident are generally subject to withholding at 21%. Dividends that qualify for the Taiwan–Korea Income Tax Agreement are subject to a maximum source-country rate of 10%. The applicable filing and withholding treatment depends on the taxpayer’s residence status, beneficial ownership, the character of the income, and the documents required to claim treaty benefits.

Business tax and profit-seeking enterprise income tax have different tax bases and filing methods, so the tax on revenue must be distinguished from the tax on taxable income. When paying dividends, interest, royalties, or service fees to an overseas shareholder or related company, the payer should review in advance the character of the payment, the recipient’s status, domestic withholding rules, and the potential application of the income tax agreement.

The Taiwan–Korea Income Tax Agreement entered into force on December 27, 2023, and applies from January 1, 2024; a maximum source-country rate of 10% also applies to qualifying interest and royalties. When determining the right to tax business profits, all four PE categories discussed above must be considered. The analysis must address not only the number of days on which services are provided but also fixed facilities, the duration of construction, an agent’s authority to conclude contracts, and the agent’s actual activities.

The treaty’s reduced rates do not apply automatically merely because the treaty exists. The taxpayer must confirm whether it is a resident under the treaty, whether it is the beneficial owner, the legal character of the income, and the certificate of residence and application documents that must be submitted. The transaction structure, contracts, invoices, actual work, and payment flows should be kept consistent, and filing deadlines and the retention of supporting records should be reviewed separately.

Official Sources

• Taiwan MOEA — Foreign-Investment Law (English)
• Taiwan MOEA — Foreign-Investment Procedures
• Taiwan MOEA Administration of Commerce — Company and Business Registration
• Taiwan Workforce Development Agency — Work Permit Manual for Managers of Foreign-Invested Businesses
• Taiwan Ministry of Finance — Taiwan–Korea Income Tax Agreement
• Taiwan Laws & Regulations Database — General Business Tax Rate
• Taiwan Tax Portal — Business Tax Filing Cycle
• Taiwan Tax Portal — Profit-Seeking Enterprise Income Tax Rate
• Taiwan Tax Portal — Taxation of Dividends Paid to Foreign Nationals
• Taiwan National Immigration Agency — Permanent Residence Guidance
• Taipei City — Advance Inquiry for Business Premises

Taiwan Investment and Company Formation Services describes the scope of our related services, and Wei Tseng’s Profile provides information about the responsible attorney’s experience and languages. For advice on a specific matter, please use Contact Our Office.

This article is an educational resource providing a general overview of Taiwan company formation and related rules, and it is not legal or tax advice for any specific matter. Because the required procedures and outcomes may vary with the investment structure, industry, the applicant’s nationality and immigration status, and current agency practice, confirm the latest official sources and the circumstances of the individual matter before investing, entering into a contract, or employing personnel.

Wei Tseng (曾雋崴), Taiwan Attorney