Wholly Owned Subsidiary

A wholly owned subsidiary is a foreign legal entity that is entirely owned and controlled by a parent company based in another country. Establishing a wholly owned subsidiary is one of the most involved ways to expand internationally, requiring the parent company to register a new legal entity in the target country, comply with local corporate, tax, and employment law, and build out the systems needed to run payroll, benefits, and HR independently in that jurisdiction. This approach gives a company the highest degree of control and long-term commitment to a market, since it can directly employ staff, own local assets, and build a lasting operational presence. However, it also comes with significant upfront costs, extended setup timelines that can take months, and ongoing compliance obligations that require dedicated local expertise. Many companies choose lighter-weight alternatives to a wholly owned subsidiary when testing a new market or building a smaller offshore team, such as partnering with an Employer of Record. An EOR allows the company to hire employees in the target country immediately, without the time, cost, and legal complexity of establishing and maintaining its own entity.