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  • Writer's pictureTaiwan Investment

TWO TYPES OF COMPANY OWNERSHIP FOR FOREIGNERS IN TAIWAN

Foreign entities can own a Taiwanese company in two ways: Either a foreign company can establish an offshore subsidiary, foreigners can also invest in or acquire existing Taiwanese companies.

To encourage foreign investment, the Taiwanese government has simplified the foreign investment review procedure. It now allows branch or subsidiary companies of foreign ownership to apply for work permits for their foreign managers, and those managers can stay in the country within the valid period of their permits. If a foreigner manages to reside in Taiwan for over 183 days in a calendar year for 5 consecutive years, that person will be eligible for permanent residency.


FOREIGN COMPANIES ESTABLISHING SUBSIDIARIES/BRANCHES IN TAIWAN: Foreign companies can establish a subsidiary company, branch company, or representative office, each subjecting to different regulations:


1) SUBSIDIARY COMPANIES A foreign company may choose to set up a subsidiary in Taiwan in the form of a limited company or company limited by shares. Subsidiary companies have the status of legal persons and can be listed on Taiwan Stock Exchange. Aside from establishing new companies, foreign companies can acquire existing companies operating in Taiwan and become their shareholders. Investing in the form of a subsidiary company is subject to review by Investment Review Committee. Branch companies must have and maintain a registered capital over NTD500,000 to be eligible to hire foreign managers. During the period, the company must also exceed NTD3,000,000 in its yearly revenues.


2) BRANCH COMPANIES

Foreign companies can establish a branch company in Taiwan. Since branch companies are part of their parent company, they have no legal-person status but have business licenses to operate in Taiwan. Branch companies are registered with the Department of Commerce, Ministry of Economic Affairs and are subject to the same requirements as subsidiary companies with regards to hiring foreign managers.

3) REPRESENTATIVE OFFICES For foreign companies that have no intention to operate in Taiwan, the representative office is their choice. A representative office has no legal-person status or business license. The scope of operation is limited to contract signing, quotation, price negotiation, tender bidding, procurement, market survey, and research activities. Representative offices are regulated by the Department of Commerce, Ministry of Economic Affairs. They can apply for work permits for foreign managers in the first year of their establishment without operation records, but the renewal of such permits for later years will take activities performed into account.


FOREIGNERS ESTABLISHING STANDALONE COMPANIES IN TAIWAN Foreign passport holders investing in Taiwan must have their source of funding reviewed by the Investment Review Committee, Ministry of Economic Affairs. Upon approval by the IRC, the fund can be transferred to Taiwan for the company registration procedure. The investor can use that fund to open a company, street shop, or invest in or even buy out existing companies in Taiwan.

Companies of foreign ownership must have a registered capital over NTD500,000 with one-third being owned by foreign entities to hire foreign managers. For a company with a capital of exactly NTD500,000 foreign capitals must account for at least NTD170,000 and to maintain this qualification, the company must exceed NTD3,000,000 in its yearly revenues.

The fund must be wired to the company account at a Taiwanese bank in foreign currencies and exchanged for New Taiwan Dollars locally. Only those having residency in Taiwan can directly deposit NTD, but the person must present certificates to prove the source of their funding such as tax receipts or gift certificates.


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