Representative & Liaison Office Setup
Establish a non-commercial presence in Europe to conduct market feasibility studies, build relationships, and manage marketing campaigns before executing a full market entry.
The Liaison and Representative Office
A Representative Office (or Liaison Office) is an entity established by a foreign company strictly to conduct auxiliary and preparatory activities. It has no separate legal identity and is legally restricted from engaging in active commercial operations.
The primary purpose of a representative office is to manage local marketing, perform market research, coordinate with local distributors, and establish brand presence. Because it cannot generate revenue, it is not treated as a Permanent Establishment (PE) and is exempt from Corporate Income Tax (CIT).
Strict Operational Boundaries
It is critical to maintain clear boundaries to prevent national tax authorities from re-characterizing the office as a taxable permanent establishment. A representative office **cannot**:
- Bill clients, sign commercial contracts, or issue invoices.
- Store, deliver, or distribute commercial inventory.
- Provide direct paid consulting or customer support services.
Employment & Social Security Compliance
While a representative office is exempt from corporate tax, it is fully subject to local employment regulations if it hires local staff.
The foreign parent must register as a foreign employer with the local tax and social security offices, withhold payroll taxes (PAYE/Lohnsteuer), and pay required national health, pension, and accident insurance contributions for its local marketing personnel.