2. Different levels. The secondary company is the direct subordinate of the primary company, and the primary company controls all the powers of the secondary company, such as operation and personnel. The subsidiary is only a holding relationship, not a direct subordinate. In theory, it cannot interfere with the operation and personnel appointment of the subsidiary at will.
Article 14 of the Company Law stipulates that a company may set up branches. The establishment of a branch company shall apply to the company registration authority for registration and obtain a business license. A branch company does not have legal person status, and its civil liability shall be borne by the company. A company may set up subsidiaries, which have legal personality and independently bear civil liabilities according to law.
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The difference between a subsidiary and a branch:
Difference 1: The procedure of setting up a subsidiary is different: a company that is completely independent in law is not only an independent accounting entity, but also an independent taxpayer. In other words, subsidiaries should have complete industrial and commercial registration and tax registration procedures. A subsidiary is an independent legal person with its own independent name, articles of association and organizational structure. Conduct activities in its own name, and the creditor's rights and debts incurred in the course of operation shall be borne independently by itself. Branch: it is not an independent legal person and has no legal personality, and its civil liability shall be borne by the head office. However, it is still necessary to go through the registration formalities in the industrial and commercial department of the place of business, but the formalities are relatively simple and do not need to be paid in the capital, and can be set up by the headquarters. No branch has the concept of registered capital. Branches established in different places belong to branches in tax law, and the choice of accounting mode depends entirely on management needs. That is to say, branches can choose independent accounting or non-independent accounting when registering (the accounting mode has nothing to do with whether they are branches or not), and the current fiscal and taxation policies are not mandatory.
Difference 2: Subsidiaries with different tax payment methods: independent legal persons, independent business activities, independent accounting entities, and completely independent taxpayers pay VAT and income tax respectively at the tax authorities where the enterprise is registered. Branches: Although they are not independent legal persons, they usually engage in business activities independently and need to pay VAT at the local tax authorities, so they are separate VAT taxpayers. Under special circumstances, unless otherwise approved by the financial and tax authorities of the State Council or its authorized financial and tax authorities, it shall be paid by the head office. Article 22 of the Provisional Regulations on Value-added Tax in People's Republic of China (PRC) stipulates that fixed business households shall declare and pay taxes to the competent tax authorities where their institutions are located. If the head office and branches are not in the same county (city), they shall declare and pay taxes to the competent tax authorities in their respective places; With the approval of the competent financial and tax authorities in the State Council or the financial and tax authorities authorized by them, the head office can report and pay taxes to the competent tax authorities where the head office is located. Therefore, if a branch has gone through the tax registration, it is an independent VAT taxpayer and should declare and pay VAT separately. Without the approval of the competent department of finance and taxation of the State Council or its authorized department of finance and taxation, the head office shall collect and pay the value-added tax. As the income tax of a branch company is uniformly calculated by the head office of the whole enterprise according to the provisions of the tax law, the head office should be regarded as an income tax payer. In practice, the income tax of headquarters and branches across provinces is paid separately according to a certain proportion after unified calculation; Headquarters and branches in a province, in accordance with the provisions of this province, unified payment by the headquarters. Whether it is paid separately or in a unified way, the head office and branches calculate income tax as taxpayers.
Difference 3: the difference of taking risks.
Subsidiary: As an independent legal person, it has its own independent legal person property and undertakes independent civil liabilities and obligations. Therefore, if it encounters business risks, it only needs to bear limited liability for its legal person property.
Branch: Not an independent legal person. If there are operational risks in the branch, the head office will take full responsibility, and the relationship between the head office and the branch is unlimited.
Difference 4: subsidiaries with different qualifications: as independent legal entities and independent financing platforms, they can obtain financing from financial institutions and investment institutions by themselves; For some industries that are supervised by the government and must obtain business qualifications before they can carry out business activities, subsidiaries must re-qualify and cannot use the business qualification branches of the parent company: they are not independent legal persons and cannot independently raise funds, but must obtain funds from the platform of the head office company; In terms of business qualifications, branches can directly use the qualifications of headquarters enterprises without re-applying. Therefore, for some special industries, such as construction, there are basically no subsidiaries, but they operate in the mode of branch companies and project departments.