A branch is the company itself abroad, which decides tax and risk

A branch is the parent, not a child

The usual description of a branch is a lighter, cheaper subsidiary. It is neither. A branch is the foreign company itself, carrying on business in another country through a fixed place of business there. There is no second company and no second legal person.

That single fact decides almost everything. The branch's contracts are the parent's contracts. Its debts are the parent's debts. A creditor of the London or Dublin branch of a Dubai company can pursue the Dubai company and everything it owns, wherever those assets sit. A subsidiary, by contrast, is a separate company with its own balance sheet, and its creditors generally stop at that balance sheet.

The same fact runs through the tax. Because the branch and the parent are one taxpayer, two countries look at the same profit. The country where the branch trades taxes what the branch earns there. The country where the parent is resident decides whether to tax that profit again, give credit for the foreign tax, or exempt it.

So the choice between a branch and a subsidiary is not a question of paperwork. It is a decision about where liability should sit and where profit should be taxed. A branch is often the right answer. It is rarely the right answer for the reason people choose it, which is that it looks simpler.

Registering a branch in the UK, Ireland and the UAE

Each country treats a foreign company's local presence as something to be registered, and each runs its own deadline.

United Kingdom. An overseas company that opens a UK establishment, meaning a branch or any other place of business, registers it at Companies House under the Overseas Companies Regulations 2009. It files form OS IN01 within one month of opening for business, with certified copies of its constitutional documents and, where they are not in English, certified translations. The registration fee is £124. Once registered, the overseas company files its accounts at Companies House within three months of the deadline for filing them in its home country.

Ireland. A company incorporated outside Ireland that establishes a branch in Ireland registers it with the Companies Registration Office under Part 21 of the Companies Act 2014, within 30 days of establishing the branch. The rules for branches of EEA and non-EEA companies are similar but not identical, and both carry ongoing filing and accounts obligations. The EEA-resident director rule in section 137 of the Act applies to companies formed under the Act, not to a foreign company registering a branch, which is one reason a branch is sometimes chosen over an Irish subsidiary. The bond that rule otherwise requires is the subject of the note on the non-resident director bond.

United Arab Emirates. A foreign company opening a branch on the mainland is licensed by the economic department of the emirate concerned and registers with the Ministry of Economy within one month of the licence being issued. The national service agent once required for mainland branches was removed by the 2020 amendments to the Commercial Companies Law, and practitioners report that a 2025 ministerial decision also dropped the AED 50,000 bank guarantee from the federal registration requirements. A branch can also be registered in a free zone under that free zone's rules, which matters for tax, as the next section explains.

How each country taxes the branch

The country where the branch trades taxes the profit attributable to it. The attribution follows the separate-enterprise principle: the branch is treated as if it were a distinct enterprise dealing at arm's length with the rest of the company, so the branch's profit reflects the functions it performs, the assets it uses and the risks it bears.

United Kingdom. A company not resident in the UK is within the charge to UK corporation tax if it carries on a trade in the UK through a permanent establishment, and it pays tax on the profits attributable to that establishment under Part 2 of the Corporation Tax Act 2009. The rates are those for any UK company, 25% on profits above £250,000 with the 19% small profits rate and marginal relief below. The UK charges no tax on the remittance of branch profits to the parent.

Ireland. A non-resident company carrying on a trade in Ireland through a branch or agency is chargeable to Irish corporation tax on the trading income arising through that branch, at the 12.5% trading rate, and on certain other income and gains connected with it. Ireland does not levy a branch profits tax on remittances.

United Arab Emirates. A non-resident person with a permanent establishment in the UAE is a taxable person on the income attributable to it, at 9% on taxable income above AED 375,000. A branch of a non-resident registered in a free zone is a Free Zone Person under the Federal Tax Authority's guidance on free zone persons, and can qualify for the 0% rate on qualifying income if it meets the substance, de minimis, audited-accounts and other conditions. A mainland branch cannot.

How the home country taxes branch profits

The second country is the parent's own. Here the corridor's three systems take three different approaches, and the difference is often decisive.

A UK parent. A UK-resident company is taxed on its worldwide profits, including those of its foreign branches, unless the foreign branch exemption applies. Under section 18A of the Corporation Tax Act 2009, the exemption has been an irrevocable election covering all of a company's foreign permanent establishments, which removes their profits and their losses from the UK computation. On 21 May 2026 the government announced that the exemption will become mandatory for most companies for accounting periods beginning on or after 1 January 2027, and draft legislation followed in July 2026. A UK company opening a branch in Dubai or Dublin should plan on the basis that the branch's profits will not be taxed in the UK, and that its early losses will not shelter UK profits either.

A UAE parent. A UAE-resident company is taxed on its worldwide income. Where it carries on business through a foreign permanent establishment, it can elect under Article 24 of Federal Decree-Law No. 47 of 2022 to exempt that establishment's income, subject to conditions; where it does not elect, or the income does not qualify, the foreign tax paid on the branch's profit is credited against the UAE tax on the same income. A free zone company that operates a foreign branch should note the Federal Tax Authority's position that profits attributable to a permanent establishment outside the free zone, including one in a foreign country, are subject to the 9% rate rather than 0%. Whether the exemption election then applies needs checking against the specific facts.

An Irish parent. Ireland has no foreign branch exemption. An Irish-resident company is taxed on its worldwide income, and foreign tax paid on a foreign branch's profits is relieved by credit against the Irish tax on the same income. Ireland introduced a participation exemption for certain foreign dividends from 2025, and the business community asked again in 2026 for it to be extended to branch profits, but at the time of writing a branch of an Irish company is still taxed at home with a credit. For an Irish group, that often tips the decision towards a subsidiary.

The branch and subsidiary side by side

When a branch is the better answer

A branch earns its place in three situations, and in each the reason is legal or commercial rather than administrative.

The business must trade as the parent. Some activities depend on the parent's own licence, capital or credit rating, such as certain financial services where the regulator authorises the branch of a foreign firm on the strength of its home regulation. Whether a UK lending or financial business needs its own authorisation is examined in the note on whether a UK company needs an FCA licence to lend.

The first step into a market. A parent testing a market with a small team, before it knows whether the operation will last, can open a branch, learn, and decide later whether to incorporate. The cost of that flexibility is that the parent's balance sheet is exposed throughout.

The profit should be taxed at home, or exempted there. Where the home country exempts branch profits and the host rate is acceptable, a branch avoids a second company without changing the tax outcome. For a UK parent from 2027, that is the default position.

A branch also comes into existence whether or not anyone intends it. A foreign company whose employees or agents habitually conclude contracts in the UK, Ireland or the UAE can have a permanent establishment there without ever registering a branch, the risk set out in the note on hiring employees across the UK and UAE.

When a subsidiary is the better answer

A subsidiary wins wherever the separation itself is the point.

Liability needs a wall. A business with litigation risk, regulated exposure or large contracts in the host country usually wants that risk inside a local company rather than on the parent's balance sheet.

Local banks and customers want a local company. A UK bank opening an account for a UK subsidiary is assessing a UK company; for a UK establishment it is assessing the foreign parent, its home regulation and its documents. Which banks will open accounts for a company run from abroad is covered in the note on opening a UK business bank account as a non-resident.

Retained profit should be taxed at the local rate. An Irish trading subsidiary pays 12.5% on profit it keeps; for an Irish parent, a foreign branch's profit is taxed in Ireland too, with only a credit. A UAE free zone subsidiary can reach 0% on qualifying income that a foreign company's mainland branch cannot.

The operation may be sold on its own. Selling a subsidiary is a sale of shares. Selling a branch is a sale of a business and its assets, with every contract and employee to transfer.

The registrations and filings a new UK subsidiary of a UAE group takes on, on three different clocks, are set out in the note on a UK subsidiary of a UAE business. For an Australian group the branch question has an extra element, Australia's exemption for foreign branch profits, examined in the note on Australian founders choosing a European base.

A branch is also one way to move without moving

A branch is the fourth option for a group that wants to operate in a new country without moving the company, alongside continuance, a new parent on top and a business transfer. It moves nothing and creates nothing, which is its strength and its limit. The full set of routes is set out in the note on moving a company to another country, and the tax charged when a company's residence moves instead is set out in the note on the corporate exit tax.

Frequently asked questions

What is the difference between a branch and a subsidiary?

A branch is the foreign company itself carrying on business in another country, so it has no separate legal personality, and the parent owns its assets and carries its liabilities. A subsidiary is a separate company incorporated in the host country and owned by the parent, with its own balance sheet, directors and filings. The difference decides who is liable to creditors, how profits are taxed in each country, how the business banks, and whether the local operation can later be sold as shares.

How do I register a UK branch of an overseas company?

An overseas company that opens a UK establishment registers it at Companies House on form OS IN01 within one month of opening for business, under the Overseas Companies Regulations 2009. The form is filed with certified copies of the company's constitutional documents, with certified translations where they are not in English, and the fee is £124. The company then files its accounts at Companies House within three months of the deadline for filing them in its home country.

How is a UK branch of a foreign company taxed?

A non-UK-resident company that carries on a trade in the UK through a permanent establishment pays UK corporation tax on the profits attributable to that establishment, at the normal rates of 25% on profits over £250,000 with the 19% small profits rate below. Profits are attributed as if the branch were a separate enterprise dealing at arm's length with the rest of the company. The UK does not tax the remittance of branch profits to the parent.

How are foreign branches of UK companies taxed?

A UK company is taxed on the worldwide profits of its foreign branches unless the foreign branch exemption in section 18A of the Corporation Tax Act 2009 applies, which removes both profits and losses of foreign permanent establishments from the UK computation. The exemption has been an irrevocable election, but the government announced in May 2026 that it will become mandatory for most companies for accounting periods beginning on or after 1 January 2027, so foreign branch losses will no longer shelter UK profits.

Can a foreign company open a branch in Dubai?

Yes. A foreign company can open a mainland branch licensed by the economic department of the emirate and registered with the Ministry of Economy within one month of its licence, without the national service agent that was required before the 2020 amendments to the Commercial Companies Law. It can also register a branch in a free zone under that zone's rules. A branch registered in a free zone can be a Free Zone Person for corporate tax and qualify for 0% on qualifying income, which a mainland branch cannot.

How is a branch of a foreign company taxed in the UAE?

A non-resident company with a permanent establishment in the UAE is a taxable person on the income attributable to it, at 9% on taxable income above AED 375,000. Where the branch is registered in a free zone, the Federal Tax Authority treats it as a Free Zone Person, so it can qualify for the 0% rate on qualifying income if it meets the substance, de minimis, audited-accounts and other conditions. The parent's home country then decides whether it taxes the same profits again.

Does an Irish branch of a UK company need an EEA-resident director?

No. The requirement in section 137 of the Companies Act 2014 that at least one director is resident in the European Economic Area applies to companies formed under the Act. A UK company that registers a branch in Ireland, within 30 days under Part 21 of the Act, remains a UK company with its own board, so the rule and the section 137 bond do not apply to the branch. The branch's profits from its Irish trade are taxed in Ireland at the trading rate.

Does Ireland have a foreign branch exemption?

No. An Irish-resident company is taxed on the worldwide income of its foreign branches, with credit for the foreign tax paid on the same income. Ireland introduced a participation exemption for certain foreign dividends from 2025, and the business community asked again in 2026 for it to cover branch profits, but at the time of writing branch profits are not exempt. For an Irish group, that often makes a foreign subsidiary more efficient than a foreign branch.

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Critical advisory. The branch is usually chosen because it looks like less work, and that is the weakest reason to choose it. The parent's whole balance sheet stands behind it, two tax systems look at its profit, and the home-country rules are changing: the UK's branch exemption becomes mandatory from 2027, the UAE offers an election, and Ireland offers only a credit. In my experience the expensive mistakes come later, when a branch that started as a test has become the real business and the group discovers it cannot ring-fence the risk or sell it cleanly. We set up and run branches and subsidiaries across the UK, Ireland and the UAE, register them, model the tax in both countries, and plan the conversion from branch to subsidiary before it becomes urgent. If you are opening in a new country, speak to us through our services page before the first contract is signed. This article is general information and not legal or tax advice; your own position should be confirmed against your specific facts before you act.