If you are planning to start a business in Nepal, choosing the right legal structure is your most important decision. It affects taxation, profit repatriation, compliance, hiring, and long-term scalability. Nepal welcomes foreign companies, but its legal framework is precise. Understanding it early saves time, capital, and regulatory risk.
This guide is written for foreign companies. It explains every legal structure available to start a business in Nepal, when each option makes sense, and how to choose the most compliant pathway.
Your legal structure determines:
Whether you qualify as Foreign Direct Investment (FDI)
How profits can be repatriated
Your exposure to local taxes and liabilities
Hiring and payroll obligations
Approval timelines and capital thresholds
Nepal’s investment regime is governed by:
Foreign Investment and Technology Transfer Act
Companies Act
Department of Industry
Office of Company Registrar
Nepal Rastra Bank
Choosing the wrong structure often results in blocked remittances or forced restructuring later.
Foreign investors can legally start a business in Nepal through the following structures:
Liaison Office
Branch Office
Private Limited Company (FDI Company)
Joint Venture Company
Public Limited Company
Employer of Record (EOR) Model
Each option serves a different market-entry objective.
A Liaison Office is a non-commercial presence. It is ideal for research, coordination, and relationship building.
Market research
Promotion and branding
Communication with local partners
Coordination with head office
Generate revenue in Nepal
Sign local commercial contracts
Invoice or receive payments
Approval required from Department of Industry
Annual renewal mandatory
All expenses funded by the parent company
This structure is suitable if you want to test the market before you start a business in Nepal fully.
A Branch Office is an extension of the foreign parent company.
Project-based work
Government or infrastructure contracts
Short-to-medium-term operations
Can generate revenue
Parent company bears full liability
Profits can be repatriated with approval
Registered with Office of Company Registrar
Regulated by Nepal Rastra Bank for forex movements
A branch office works well when Nepal is not your long-term base but you need operational authority.
This is the most common and scalable way to start a business in Nepal.
Separate legal entity
Limited liability
Full commercial operations allowed
Clear exit and repatriation framework
Minimum foreign investment threshold as per FITTA
Industry approval from Department of Industry
Company registration at OCR
Bank approval for capital inflow
Outsourcing and captive centers
IT and software companies
Professional services firms
Manufacturing and trading businesses
If you plan to hire staff, invoice locally, and grow sustainably, this is the preferred structure.
A Joint Venture (JV) involves partnering with a Nepali individual or company.
Regulated or restricted sectors
Local market knowledge is essential
Government-linked projects
Foreign and Nepali shareholders
Profit sharing as per shareholding
Governance defined in shareholder agreements
Partner disputes
Exit complexity
Minority shareholder protections
A JV is powerful but requires strong legal documentation.
A Public Limited Company is suitable for large-scale investments.
Minimum seven shareholders
Higher compliance and disclosure
Ability to raise capital publicly
Infrastructure developers
Banks and financial institutions
Large manufacturing enterprises
This structure is rarely used for first-time foreign investors.
The EOR model allows foreign companies to hire Nepali employees without setting up a legal entity.
A local provider employs staff on your behalf
You manage day-to-day work
Provider handles payroll, tax, and compliance
No incorporation
Fast market entry
Full compliance with labor laws
This model is ideal for companies that want to start operations in Nepal quickly before formal investment.
| Structure | Revenue Allowed | Liability | Setup Time | Ideal For |
|---|---|---|---|---|
| Liaison Office | No | Parent | 4–6 weeks | Market entry |
| Branch Office | Yes | Parent | 6–8 weeks | Project work |
| Pvt Ltd (FDI) | Yes | Limited | 8–12 weeks | Long-term operations |
| Joint Venture | Yes | Limited | 10–14 weeks | Regulated sectors |
| Public Company | Yes | Limited | 16+ weeks | Large investments |
| EOR Model | Indirect | None | 1–2 weeks | Hiring teams |
Define business activity and sector eligibility
Select the optimal legal structure
Secure investment approval
Register with OCR and tax authorities
Open bank accounts and inject capital
Register for VAT and payroll compliance
Begin operations
Each step must align with Nepalese regulations to avoid delays.
Foreign companies operating in Nepal must comply with:
Corporate income tax
Withholding tax
VAT (if applicable)
Social Security Fund contributions
Annual audit and filings
Non-compliance can restrict profit repatriation.
Choosing a liaison office when revenue is required
Underestimating FDI approval timelines
Ignoring sector-specific restrictions
Poor shareholder agreements in JVs
Avoiding these mistakes protects your investment.
Nepal is attractive for:
Cost-efficient talent
Strategic access to South Asia
Growing digital and services economy
With the right structure, Nepal can become a long-term operational hub.
Yes. Many sectors allow 100 percent foreign ownership under FITTA, subject to approval.
The minimum FDI threshold is prescribed by the government and may change by sector.
A private limited FDI company typically takes 8–12 weeks, including approvals.
Yes. Profits, dividends, and capital can be repatriated after tax and central bank approval.
Yes. EOR is widely used and compliant when structured correctly.
To start a business in Nepal successfully, your legal structure must align with your commercial goals, risk appetite, and expansion timeline. Most foreign companies choose a private limited FDI company or begin with an EOR model before scaling.
Making the right choice early protects your capital and accelerates growth.
Thinking of starting operations in Nepal?
Book a strategic consultation to identify the safest and fastest legal structure for your business.