First, the establishment procedures are different

Branch office: The establishment procedure is relatively simple and can be understood as registration and establishment. The specific process is as follows:

The company shall, within 30 days after making the decision to set up a branch (if the application must be submitted to the relevant department for approval according to laws, administrative regulations or the decision of The State Council, it shall, within 30 days from the date of approval), bring the registration application signed by the legal representative, the copy of the articles of association and the license, the certificate of business premises and the person in charge and other materials. Apply for registration with the industrial and commercial registration authority outside the domicile of the head office.

The business scope of a branch shall not exceed the business scope of the head office. If the business scope of a branch falls within the items that are required to be approved before registration according to laws, administrative regulations or decisions of The State Council, the relevant approval documents shall also be submitted.

Subsidiary: The establishment procedure is the same as that of a general company, and it is more complicated than a branch company. The specific process is as follows:

First, the parent company must go through the investment approval procedures;

Secondly, the parent company shall negotiate with other shareholders to reach a capital contribution agreement (except for wholly-owned subsidiaries of the parent company), prepare the articles of association of the company, elect members of the board of directors and the chairman of the board of directors (if there is no board of directors, the executive director can be elected), elect members of the Board of supervisors and the chairman of the board of supervisors (if there is no board of supervisors, a supervisor can be elected), and select the legal representative;

Then according to the requirements of the company registration authority to prepare materials for registration, shareholders in accordance with the law and the provisions of the articles of association to make capital contributions, at this point, the establishment procedure can be completed.

A subsidiary may carry out business activities in its own name, and its business scope is not limited to the business scope of its parent company.

Second, different legal status

Branch: a branch directly engaged in business operations under the head office, without its own shareholders' meeting, board of directors and other institutions, only the head person appointed by the head office and other management personnel. The name of the branch shall be preceded by the name of the head office, with words such as "branch", "branch", "branch", etc.

Subsidiary: Compared with the parent company, it is a new independent company, which has its own shareholders' meeting, board of directors and other institutions in accordance with the law, has independent corporate status, and has its own company name and articles of association.

3. Different ways of taking responsibility

Branch company: A branch company established in accordance with the law may be a party to a civil lawsuit, has litigation qualifications, and has independent contracting capacity. However, the branch does not have the status of a legal person and cannot independently bear civil liability to the outside world, and its civil liability shall be borne by the head office.

If the branch, as the person subject to enforcement, is unable to pay off its debts, the court may rule that the head office is the person subject to enforcement; if the property under the direct operation and management of the head office is still unable to pay off its debts, the court may rule to execute the property of other branches under the head office.

Subsidiary: can independently bear civil liability, the parent company only as its shareholder, limited liability to the amount of capital contribution, except the parent company violates the provisions of the company law in the case of false investment or withdrawal of funds, and personality denial, creditors shall not recover from the parent company for the uncompensated part.

It should be reminded that the responsibility of one-person companies is relatively special. Article 63 of the Company Law separately provides for the "liability of a one-person company" : "If a shareholder of a one-person limited liability company cannot prove that the property of the company is independent of the shareholder's own property, he shall bear joint and several liability for the company's debts." Conversely, if the subsidiary is a one-person company, the parent shareholder only has limited liability for the debts of the subsidiary if he can prove that his property is independent of that of the subsidiary.

Fourth, the management control mechanism is different

Branch: Personnel, business, property is directly controlled by the head office, with subordinate attributes. The head office may delegate all or part of the management rights of the enterprise to the branch, but the head office shall not lose the management rights of the personnel, property rights and contract signing rights of the branch, so as to prevent the company from bearing joint property losses and other legal risks due to the poor operation of the branch.

Subsidiaries: From a business perspective, subsidiaries are dominated and controlled by the parent company in terms of economy and decision-making, which is generally manifested in the relationship of controlling and being controlled by shares, which can be wholly owned or controlled by the largest shareholder. The parent company can directly make investment decisions by appointing and removing members of the board of directors of subsidiaries and resolutions of shareholders' meetings, thus affecting the production and operation strategies of subsidiaries.

However, at the legal level, a subsidiary is an independent legal person, with an independent organization, independent property, independent accounting, and self-responsibility for profits and losses. A subsidiary shall be liable for its operating liabilities to the extent of its entire property.

5. Different tax administration methods

Branch companies: In the collection and administration of enterprise income tax, the provisions of the "Interim Measures for the Administration of the Collection and Administration of the Income Tax of enterprises with cross-regional Business and Aggregate tax payment" shall be implemented, and the income tax treatment principles of "unified calculation, hierarchical management, local pre-payment, summary liquidation, and financial transfer" shall be calculated and paid.

The branch company and the head office shall carry out the summary tax declaration, and the summary tax payment and the head office or other branches can offset each other's profits and losses, and the head office shall make a unified declaration. The head office and the branch office shall accept the administration of the local competent tax authorities respectively, calculate the financial interests of the head office and the branch office according to the actual profits of the current period, in accordance with the pre-payment apportionment method stipulated in the Interim Measures, and pay the enterprise income tax in advance by stages, 50% of which shall be apportioned among the branches and 50% of which shall be paid by the head office. The branch does not have an independent legal personality and cannot obtain preferential tax policies given by the local government.

Subsidiaries: are fully independent taxpayers with full tax liability. The parent company and the subsidiary company are two legal persons with independent assets respectively. For the calculation and payment of various taxes, the subsidiary company is independent of the parent company. The parent company can only distribute the after-tax profits of the subsidiary according to the proportion of shares, and the loss of the subsidiary company cannot be offset against the profit of the parent company. As an independent legal person, subsidiaries can enjoy tax holiday policies provided by the national and local governments, and can also enjoy preferential tax treatment from multiple perspectives according to many factors such as enterprise scale, industry or location.

6. Different ways of labor management

Branch: In principle, ordinary branch companies need to be authorized by the head office to sign labor contracts and conclude labor relations with workers. At present, according to Article 4 of the Implementation Regulations of the Labor Contract Law, if a branch company has obtained a business license or registration certificate in accordance with the law, it can conclude labor contracts with workers as an employer.

However, the exercise of labor management power of the branch company is generally strictly controlled by the head office. Even if the branch company with a business license or registration certificate can sign a contract with the worker as an employer under the provisions of the law, it is only exercising the actual labor management power on behalf of the head office. This is because the relationship between the head office and the branch is between management and management. The branch office is under the substantial control of the head office in terms of employment scale, rules and regulations, and whether the branch office is abolished is also decided by the head office. Therefore, the labor relations and labor rights under the branch office do not and cannot exist separately from the head office.

One point to be reminded here is that due to the essentially use and use relationship between the workers under the branch and the head office, once the branch is abolished, the obligation to pay the workers' economic compensation may be borne by the head office.

Subsidiary: It has the status of an independent legal person and can establish labor relations with workers. At the level of labor law, the parent-subsidiary company is an independent employer, and can exercise the right of labor management independently without relying on either party.

In practice, there are generally three modes of labor relations management of parent-subsidiary companies:

① Subsidiaries independently exercise labor rights, and human resources management is relatively independent;

(2) The parent company shall exercise the labor right in a unified manner and conduct overall management, and the human resource management department of the subsidiary shall belong to the parent company and exist only as its executive organ;

(3) The parent company exercises the right of employment management to a limited extent, such as the direct management of senior executives and middle managers of the subsidiary company, and some functional modules of the human resources department are managed by the parent company, and only some of them are authorized to be managed by the subsidiary company.

In the latter two models, the rules and regulations of the parent company need to be transformed into the rules and regulations of the subsidiary company through democratic discussion, equal consultation and other procedures. This transformation usually occurs in two ways:

① The rules and regulations of the parent company shall be discussed and formulated through democratic procedures such as the representative meeting of the staff of the parent-subsidiary company, and shall be applied to the parent-subsidiary company after being publicized to the staff of the parent-subsidiary company;

(2) The subsidiary company converts the rules and regulations of the parent company into its own rules and regulations through democratic procedures through the staff congress and other means, which is applicable to the labor management of the subsidiary.