Contents
For many foreign companies, expanding business to Australia is an attractive choice. In 2025, Australia continues to be one of the most appealing destinations for international expansion. Recent rankings now place Australia at 12th out of 190 countries (and 4th out of OECD countries) for ease of doing business. This favourable ranking is due to Australia’s robust credit information standards, streamlined business set-up processes, and a transparent judicial system.
As a result, many companies are considering whether they can operate in Australia and what registrations or incorporation arrangements may be necessary.
If this sounds like you, read on to discover more about your options.
Can Foreign Companies Operate In Australia?
If you ‘carry on a business’ in Australia, you must either establish a local subsidiary company (wholly or partly owned) or set up a branch office.
But what exactly does it mean to ‘carry on a business’ in Australia? The regulatory framework, governed primarily by the Corporations Act, does not provide an explicit definition, which can sometimes lead to ambiguity. It is vital to assess your business activities to determine whether they fall under this classification.
Common examples of activities that may be regarded as carrying on a business include:
- Dealing with property in Australia on behalf of another party
- Taking a series of actions to advance a company’s commercial interests in Australia
- Operating a business in Australia with a view to generating profits
- Frequently entering into deals and contracts within Australia
If you are uncertain whether your company’s activities qualify as carrying on a business in Australia, it may be wise to speak with an Australian lawyer. Consider exploring our online legal consultation services for tailored advice on this matter.
What If You’re Not Carrying On a Business In Australia?
If your company is not considered to be carrying on a business in Australia, you aren’t required to establish a subsidiary or branch. Instead, you might opt to open a representative office.
This option allows you to promote and represent your company in Australia without engaging in activities that would be classified as carrying on a business.
However, note that a representative office cannot undertake activities that might be interpreted as conducting business operations – if you intend to do so, you will need to set up a branch or subsidiary.
Should A Foreign Company Incorporate A Subsidiary Or Register A Branch Office?
See the table below for a high-level comparison of subsidiary and branch structures.
| Subsidiary | Branch | |
| Setup Requirements | Business address, at least one Australian resident director and a compliant governance structure. | Application form and a certified copy of incorporation from the country of origin. |
| Entity | An Australian company with an Australian Company Number (ACN). | A foreign entity with a registered Australian Registered Body Number (ARBN). |
| Liability | Limited to the shares held in the local company. | Liability remains with the foreign company. A resident Australian agent is required and may be held accountable under Australian corporate regulations. |
| Office Required | Yes, to receive official correspondence from ASIC. | Yes, and it must be staffed during designated hours by your agent. |
| Tax Applicable | Worldwide income and GST. | Only Australian-sourced income and GST. |
| Tax Filings Required | Regular tax filings with the ATO covering worldwide income of the Australian entity. | An annual return for the foreign company and tax filings with the ATO for income derived from Australia. |
| Corporate Filings Required | Yes, including an annual fee. | An annual return fee applies. |
Let’s take a closer look at these two options.
Option 1: Wholly or Partly Owned Subsidiaries
A wholly or partly owned subsidiary is a local company that is owned by a foreign parent entity. As a distinct Australian legal entity, your subsidiary will be subject to local corporate laws and will have financial reporting confined to its Australian operations.
Benefits Of A Subsidiary Company
Subsidiary companies offer several advantages to foreign businesses by legally segregating operations. This separation can help protect the parent company from litigation risks and limit the scope of any legal issues to the local entity. Additionally, subsidiaries allow for streamlined financial reporting confined to Australian activities. For further insights, check out our Company Set Up service page.
Starting And Operating A Subsidiary Company
To establish an Australian subsidiary, foreign companies can incorporate locally by submitting an application with ASIC. The process involves registering to receive an Australian Company Number (ACN), appointing at least one Australian resident director, and filing annual statements that detail shareholders, directors, and other pertinent information. Directors must adhere to their duties under Australian law, ensuring full compliance at all times.
Option 2: Branches
Branches provide an alternative route for foreign companies wishing to operate in Australia. Unlike subsidiaries, branches are not separate legal entities – the foreign company remains fully liable for all operations conducted within Australia.
Benefits Of A Branch Office
There are two main benefits to operating a branch office compared with a subsidiary. Firstly, the process of establishing and maintaining a branch is generally less onerous administratively. Secondly, branch offices are taxed solely on the income generated in Australia, which can be advantageous in certain scenarios. For more on tax implications and other benefits, you might find our insights on starting a business in Australia helpful.
Starting And Operating A Branch Office
To set up a branch office, foreign companies must complete an application form with ASIC and submit certified copies of their incorporation documents. Upon registration, your business will be assigned an Australian Registered Body Number (ARBN) for identification purposes. Although branches are extensions of the parent company, they are expected to comply with Australian regulations and tax obligations.
It is also important to note that branch offices must maintain a local office staffed by an authorised agent during specified hours (typically from 10 am to 12 pm and 2 pm to 4 pm). Should you need alternative hours, you must notify ASIC accordingly. Additionally, your branch must clearly identify itself with its ARBN on all official documentation.
Recent regulatory updates in 2025 have further streamlined compliance requirements for both subsidiaries and branch offices. The Australian government has introduced initiatives aimed at reducing administrative burdens and enhancing transparency. For up-to-date advice on navigating these changes, consider consulting our online legal services or reviewing our guidance on contract drafting and corporate regulation.
Conclusion
Foreign companies operating in Australia must register locally as either a branch or a subsidiary. Subsidiary companies can offer enhanced separation between international operations and local activities, while branch offices represent a simpler, though more directly accountable, alternative. Choosing the right structure is crucial for ensuring compliance and setting the stage for success in the Australian market.
Next Steps
If you are interested in setting up the optimal structure for your business in Australia, we are here to help. The friendly team at Sprintlaw can assist in establishing your subsidiary or branch quickly and seamlessly. For additional information on business set up and contract drafting, feel free to call 1800 730 617 or email us at team@sprintlaw.com.au.
Meet some of our Business Set Up Lawyers
Speak to our expert lawyers, quick and online.
Top 3 Legal Mistakes
Book in a free consultation with us to discuss your legal needs.