---
title: "Company registration in Nepal: branch vs subsidiary guide"
description: Choose the right Nepal entry route. Compare branch vs subsidiary, steps, costs, taxes, approvals, and compliance. Actionable 2025 guide for foreign investors.
---

[Insights](https://digitalconsultingventures.com/insights)

# [Company registration in Nepal: branch vs subsidiary guide](https://digitalconsultingventures.com/insights/company-registration-in-nepal-branch-vs-subsidiary-guide)

 Written by [Pjay Shrestha](https://digitalconsultingventures.com/insights/author/pjay-shrestha) | Sep 15, 2025 7:37:01 AM

If “**company registration in Nepal**” is on your roadmap, you face an early fork in the road: **open a branch** of your foreign company or **incorporate a Nepal subsidiary**. The choice affects liability, tax, repatriation, and speed. This guide breaks down both paths with clear steps, timelines, and compliance.

You will learn when a branch wins, when a private limited subsidiary wins, how approvals work, and what to budget. We also share a decision framework you can apply in minutes.

## The quick answer 

- **Pick a branch** when you need a quick, project-bound presence under foreign control and name.
- **Pick a subsidiary** when you need long-term operations, local invoicing flexibility, investors, or Nepal-specific incentives.
- **Both routes** require registration, tax numbers, and compliance. The **subsidiary** offers better ring-fencing of risk and funding options.
- **Foreign investment** rules apply if you inject capital or bring technology.
- **Taxes** differ mainly in cross-border withholding and treaty use, not the headline corporate rate.

## What “company registration in Nepal” can mean

- **Branch office** of a foreign company
- **Private limited subsidiary** (Nepal company, foreign shareholding)
- **Liaison/representative office** (non-trading, information only) — included here only to contrast scope
- **Project/contract office** (often treated as a branch form tied to a specific contract)

This article focuses on **branch vs subsidiary**, as those are the two trading options most foreign investors weigh.

## Regulatory framework you should know

- **Companies Act 2063 (2006)** governs company formation and foreign company registration in Nepal.
- **Foreign Investment and Technology Transfer Act (FITTA) 2019** and its **Regulations** govern foreign investment approvals, capital, and technology transfer.
- **Industrial Enterprise Act (IEA) 2019** lays out industry categories and incentives.
- **Income Tax Act 2002** and **VAT Act 1996** govern corporate tax, withholding, and VAT.
- **Labour Act 2017** governs employment contracts, hours, benefits, and terminations.
- **Nepal Rastra Bank (NRB)** circulars and directives handle foreign exchange, capital inflows, and repatriation.
- **Immigration Rules** govern investor and work visas.

> Tip: If your model involves equity capital from abroad, **FITTA** considerations will sit alongside your Companies Act tasks.

## Branch vs subsidiary at a glance 

| Dimension | Branch (foreign company) | Subsidiary (Nepal private limited) |
| --- | --- | --- |
| **Legal status** | Same legal person as head office | Separate Nepal legal person |
| **Governing law** | Companies Act foreign company provisions; sector approvals as needed | Companies Act for incorporation; FITTA for foreign shareholding |
| **Scope** | Trade only within permitted scope and approvals; often project-bound | Full operational scope per MOA/sector list |
| **Liability** | Head office bears liabilities | Liability ring-fenced to Nepal entity (limited to paid-up capital) |
| **Branding** | Uses foreign company name (with “Nepal Branch/Project Office”) | Local name; can match global brand |
| **Approvals** | Sector or project approvals + foreign company registration | FITTA approval (if foreign equity) + incorporation |
| **Capital** | No share capital; fund via remittances from HO | Paid-up share capital; equity from foreign shareholder(s) |
| **Banking** | Project/branch account; inflows typically from HO | Capital account for equity; current accounts for operations |
| **Tax profile** | Permanent establishment; Nepal-source income taxed | Resident taxpayer on worldwide income (with Nepal nexus) |
| **Corporate tax** | Headline rate broadly aligns with resident rates; incentives limited | Headline rate; can tap IEA/FITTA incentives where eligible |
| **Withholding** | Cross-border remittances often trigger WHT; treaty relief may apply | Dividends, interest, royalties subject to WHT; treaty relief possible |
| **Repatriation** | Profit repatriation to HO, subject to tax and NRB compliance | Dividend repatriation to foreign shareholder, post-tax and approvals |
| **Accounting & audit** | Nepal books required; audit usually mandatory | Nepal books; statutory audit usually mandatory |
| **Compliance load** | Moderate; tied to project scope and filings | Higher breadth: corporate secretarial, board governance, AGM, returns |
| **Speed to start** | Often faster when tied to a signed contract | Slightly longer due to FITTA + incorporation steps |
| **Best for** | Contract execution, EPC, short-medium projects | Long-term operations, hires, local sales, fundraising |

## Who should choose a branch?

Choose a **branch** if most of these are true:

1. You have a **specific contract** in Nepal with a clear end date.
2. You need to **invoice under the foreign company’s name** for that project.
3. You want **tight control** from head office.
4. You will **remit costs and working funds** from the foreign parent.
5. Sector rules **explicitly allow** branch operations for your activity.
6. You are **not** seeking local investors now.

## Who should choose a subsidiary?

Choose a **subsidiary** if most of these are true:

- You need **long-term market presence** and local brand equity.
- You plan to hire **local teams** and sign **local customer contracts**.
- You may **raise capital** later or add local JV partners.
- You need **wider scope** and flexibility in activities.
- You want **liability ring-fencing** within Nepal.
- You aim to access **incentives** tied to sectors, regions, or reinvestment.

## Nepal entry routes: scope and restrictions in simple terms

- **Branch:** Trades **only within** approval scope. Good for EPC, construction, consulting tied to a project.
- **Subsidiary:** Trades per its **MOA** and sector permissions. Best for ongoing sales, services, manufacturing, or tech ops.
- **Liaison office:** **No trading**. Market research and coordination only.
- **Project office:** A branch variant **tied to a single contract**.

## Foreign investment (FITTA) essentials you cannot skip

- **Minimum investment threshold:** Nepal sets a **minimum foreign investment** amount. This threshold does change. Confirm the current NPR figure before you structure capital.
- **Instruments allowed:** Equity shares, reinvested earnings, technology transfer, and others permitted by law.
- **Prohibited or restricted sectors:** Certain activities may be **fully restricted** or need **special approvals**. Always check your sector list before sign-off.
- **Valuation & source of funds:** Show **legitimate source**. Use **banking channels** for every remittance.
- **Repatriation:** Dividends and capital gains **can be repatriated** after taxes and **NRB** compliance. Keep your **tax clearance** tidy to avoid delays.

> Practical note: If your investment is **equity** into a subsidiary, expect **FITTA** approval alongside incorporation. If you run a **branch** funded by head office, focus on **project approvals**, **foreign company registration**, and **NRB** inflow documentation.

## Tax basics (non-exhaustive, 2025 high-level)

- **Corporate income tax:** The general rate is commonly **around 25%**. Sectoral incentives can reduce or increase effective rates.
- **VAT:** Standard rate **13%** on taxable supplies. Some sectors are zero-rated or exempt.
- **Withholding tax:** **Dividends, interest, royalties, and service fees** may attract WHT. **Tax treaties** can change rates.
- **Permanent establishment:** A **branch** is typically a **PE**. A **subsidiary** is a **resident taxpayer**.
- **Losses and incentives:** Loss carryforward and investment incentives exist with conditions.
- **Transfer pricing:** **Arm’s length** pricing applies for related-party transactions. Maintain documentation.

> Always model **net repatriation** outcomes. Headline rates do not tell the full story when cash must cross borders.

## Employment & visas

- **Subsidiary and branch** can hire local employees under the **Labour Act**.
- **Work permits** and **business visas** are available for eligible foreign directors and specialists.
- Maintain **employee contracts**, **payroll**, **social security (SSF)** compliance, and **grievance** processes.

## Step-by-step: branch registration in Nepal

1. **Confirm scope & sector**: Ensure your activity is eligible for a branch or project office.
2. **Prepare documents**: Board resolution, constitutional docs, Certificate of Incorporation, latest audited accounts, and a **local address**.
3. **Translate & notarise**: Use certified translations and **consular/legalisation** where required.
4. **Foreign company registration**: File under Companies Act provisions for a **foreign company**.
5. **Sector approvals**: Obtain **project/sector** clearances if your industry needs them.
6. **Tax registration**: Obtain **PAN** and **VAT** (if applicable).
7. **Banking**: Open a **branch/project** account. Fund via **head-office** remittances.
8. **Labour & SSF**: Register for employer obligations before hiring.
9. **Accounting setup**: Nepal **chart of accounts**, compliance calendar, audit partner.
10. **Go-live**: Invoice and operate **within the permitted scope** only.

**Indicative timeline:** Often **faster** than a FITTA-based subsidiary when tied to a **signed contract** and a complete document set. Factor time for **legalisations**.

## Step-by-step: subsidiary 

1. **Name & activity definition**: Align with sector rules and investment plan.
2. **Shareholding structure**: Foreign shareholder(s) and percentage split.
3. **FITTA approval**: Apply for **foreign investment** approval for equity.
4. **Draft constitutional docs**: MOA/AOA tailored to your control and veto needs.
5. **Incorporation filing**: Register the **private limited** company.
6. **Capital inflow**: Remit **equity** via banking channels and **document** the source.
7. **PAN & VAT**: Obtain tax registrations based on expected turnover and supplies.
8. **Banking**: Capital account + operational accounts.
9. **Board setup & governance**: Appoint directors, define signing matrix, adopt **board calendar**.
10. **Labour & SSF**: Employer registration, policies, contracts.
11. **Accounting & audit**: Appoint auditor, adopt policies, implement **ERP or accounting** system.
12. **Go-live**: Issue **local invoices**, enter **commercial contracts**, and operate.

**Indicative timeline:** **Longer** than a branch due to **FITTA**. Good planning keeps you on schedule.

## Compliance calendar 

- **Annual financial statements** and **statutory audit**
- **Annual return** and **board/AGM** formalities
- **Tax filings**: VAT returns, TDS/WHT, corporate tax estimates and final return
- **Labour & SSF**: monthly contributions and filings
- **NRB**: foreign inflow reporting and repatriation approvals
- **Change filings**: directors, address, shareholding changes

Set reminder owners for **Legal, Finance, HR**, and **NRB liaison**.

## Costs & budgets 

- **Government fees**: Registration and stamping vary by capital and form.
- **Professional fees**: Legal, FDI, tax, payroll setup, and audit.
- **Translations & legalisations**: Allow for certified translations and consular costs.
- **Banking and FX**: Wire fees and spreads for capital inflows and repatriation.
- **Ongoing**: Accounting, payroll, HR, audit, and compliance reviews.

> Build a year-one budget that includes **one-off formation** plus **12 months of operations**.

## Risk & mitigation map

- **Scope drift (branch):** Operate beyond permitted scope.
  
    - *Mitigation:* Build a **contract register** and scope checklist.
- **Repatriation delays:** Missing documents or tax clearances.
  
    - *Mitigation:* Maintain **NRB files**, **tax clearance**, and **board resolutions** in real time.
- **Turnover triggers:** VAT/withholding thresholds and sector caps.
  
    - *Mitigation:* **Tax calendar** and **dashboard** alerts.
- **Related-party pricing:** Transfer pricing exposures.
  
    - *Mitigation:* **Intercompany policy** and benchmarking.
- **Labour compliance gaps:** Contracts and SSF lapses.
  
    - *Mitigation:* Standard **HR playbook** and monthly compliance audit.

## Decision framework: five questions to settle it fast

1. Is your Nepal presence **project-bound** or **long-term**?
2. Do you need **local equity** or JV capital now or later?
3. Is **liability ring-fencing** important to your board?
4. Will you do **broad local sales and hiring**?
5. Do you want access to **sector incentives** and **local contracts**?

If most answers lean **project/short-term**, start with a **branch**. If they lean **long-term/expansion**, go **subsidiary**.

## Company registration in Nepal: how we (DCV) typically deliver

1. **Entry assessment**: Sector allowed? Branch vs subsidiary fit?
2. **Structure memo**: Shareholding, governance, and cash-flow mapping.
3. **Approvals plan**: FITTA, sector nods, and timeline.
4. **Document factory**: Charters, resolutions, translations, and forms.
5. **Regulatory filings**: Company, tax, labour/SSF, and NRB.
6. **Operational launch**: Banking, payroll, ERP, and compliance calendar.
7. **Quarterly review**: Tax, FX, and board compliance check.

## Example timelines

- **Branch/project office:** 4–8 weeks from complete dossier, excluding legalisation lead times.
- **Subsidiary with foreign equity:** 6–12 weeks depending on approvals, capital flow timing, and sector checks.

## Case-style scenarios

**EPC contractor with a signed hydro contract**

- **Choose:** Branch or project office.
- **Why:** Contract-bound scope, head-office remittances, fixed tenure.
- **Watch:** VAT on works, WHT on services, and repatriation planning.

**SaaS company building a Nepal support and sales hub**

- **Choose:** Subsidiary.
- **Why:** Hiring, local invoicing, long-term presence, transfer pricing controls.
- **Watch:** TP policy, data compliance, and VAT on digital services.

**Garment sourcing office with steady buyers**

- **Choose:** Subsidiary.
- **Why:** Local suppliers, ongoing operations, potential incentives.
- **Watch:** Indirect tax and export documentation.

## On-page SEO checklist used for this article

- Primary keyword appears in the **title**, **first paragraph**, **one H2**, **image alt**, and the **conclusion**.
- LSI terms sprinkled naturally: *foreign investment*, *FITTA*, *private limited*, *branch office*, *company incorporation*, *VAT*, *NRB*, *repatriation*.
- Short sentences and compact paragraphs for readability.
- Original comparison table.
- FAQ block aligned to “People Also Ask”.
- Clear CTA.

## Numbered setup list you can hand to your team

1. Confirm **sector eligibility** and **entry route**.
2. Prepare **KYC** for shareholders/directors and **foreign company** (if branch).
3. Draft **MOA/AOA** (subsidiary) or **board resolution** (branch).
4. Arrange **translations** and **legalisation**.
5. File **company/foreign company** registration.
6. Apply **FITTA** (if foreign equity).
7. Open **bank accounts**; remit **capital or funds**.
8. Obtain **PAN** and **VAT** (as applicable).
9. Register **Labour/SSF**; set **payroll**.
10. Implement **accounting** and **compliance calendar**.
11. Go-live and start **invoicing** within scope.
12. Quarterly **compliance review** and **NRB** files tidy-up.

## Bulleted list: documents you’ll usually need

- Passports and addresses of **directors/shareholders**
- **Certificate of Incorporation** and **constitution** (for head office or JV partner)
- **Board resolutions** sanctioning the Nepal setup
- **MOA/AOA** draft (subsidiary)
- **Audited financials** (for foreign company/parent)
- **Office lease** or address proof in Nepal
- **Tax registrations** and specimen signatures
- **Sector approvals**, if any 

## FAQ

**1) Is a branch faster than setting up a subsidiary in Nepal?**  
Often yes, especially when tied to a signed project and complete documents. Subsidiaries need FITTA approval for foreign equity, which adds steps.

**2) Can a branch do all the activities a subsidiary can?**  
No. A branch must operate within its approved scope. A subsidiary can adopt broader scope per its MOA and sector rules.

**3) What taxes apply to a branch vs a subsidiary?**  
Both face corporate tax and VAT where applicable. Differences arise in withholding on cross-border payments and treaty use. Model net cash after tax.

**4) Can I repatriate profits from Nepal freely?**  
Yes, after paying due taxes and meeting NRB conditions. Keep tax clearance and NRB documentation complete to avoid delays.

**5) What is the minimum foreign investment amount?**  
Nepal sets a minimum foreign investment threshold, which can change. Confirm the current NPR amount before finalising your structure.

[View full post](https://digitalconsultingventures.com/insights/company-registration-in-nepal-branch-vs-subsidiary-guide)

```json
{
  "@context" : "http://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Pjay Shrestha"
  },
  "dateModified" : "2025-09-15T07:37:01.423Z",
  "datePublished" : "2025-09-15T07:37:01Z",
  "headline" : "Company registration in Nepal: branch vs subsidiary guide",
  "image" : {
    "@type" : "ImageObject",
    "height" : 1080,
    "url" : "https://digitalconsultingventures.com/hubfs/Untitled%20design%20%283%29-Sep-15-2025-07-36-32-4544-AM.jpg",
    "width" : 1920
  },
  "mainEntityOfPage" : "https://digitalconsultingventures.com/insights/company-registration-in-nepal-branch-vs-subsidiary-guide",
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "height" : 60.0,
      "url" : "https://digitalconsultingventures.com/hubfs/Digital%20Consulting%20(6)-2.png",
      "width" : 60.0
    },
    "name" : "Insights"
  }
}
```