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Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

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# A B C D E F G H I J L M N O P R S T U V W X Y Z

Foreign subsidiary

What is a foreign subsidiary?

A foreign subsidiary, also known as a daughter company, is a company that’s controlled and partially or wholly owned by another company in a different country. They are considered to be separate legal entities from their parent companies and therefore follow the local laws and tax regulations of the country they are based in.

A company might set up a foreign subsidiary to hire in a new location, lessen its taxes, or establish a presence in a new market. Because these companies only need to meet the legal requirements of the country they operate in, they can tailor their operations to suit the local business environment. And if the subsidiary gets into legal trouble, the parent company remains separate.

The disadvantage is that starting a foreign subsidiary can be expensive. Alongside startup costs, companies have to consider legal fees and regulatory compliance costs. Meanwhile, navigating the legal and regulatory landscape of a foreign country can be complex and time-consuming.

A good alternative is to use a global Employer of Record service such as Multiplier. This allows you to hire staff in another country and scale your company without setting up a local entity. You don’t have to worry about setup costs, meeting compliance requirements, or managing admin.

Ready to take the leap? Choose Multiplier as your EOR partner

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