In short
Both countries offer a subsidiary or a registered branch of the German company. A subsidiary needs at least one director who lives locally; a branch needs a local agent or authorised representative, and puts the German company's own accounts on the local register every year. The legal steps are short. The decision belongs to the business and the accountant, and the tax answer should come before anything is incorporated.
- A resident director carries the full duties of a director in both countries.
- On the Australian branch route, ABRS states that every director of the German company needs a director identification number.
- The intercompany contracts are the larger part of the legal work, and they are what the tax analysis tests.
The choice turns on where the business is, not on which law is easier
Australia and Singapore ask a German company for close to the same legal machinery, so the law rarely decides between them. Each offers a local company or a registered branch of the German company. Each requires someone who lives there, a registered office, and annual filings with the corporate regulator, being the Australian Securities and Investments Commission (ASIC) in Australia and the Accounting and Corporate Regulatory Authority (ACRA) in Singapore.
What decides it is commercial and fiscal. Where are the customers, the staff and the contracts actually going to sit? Which entity will hold the regional contracts, employ people and invoice? And what does the tax answer look like once both sides of the group are taken into account? The first two questions are for the business. The third is for the accountant, and it should be answered before anything is incorporated.
This guide sets out what each route requires in law, side by side. It is written from the Australian side: we advise on Australian law, and the Singapore position is stated from the Singapore statute as it stood on the date shown above.
Subsidiary or branch: the first legal decision
A subsidiary is a separate company the German parent owns. A branch is the German company itself, registered to do business locally. That difference drives almost everything that follows, from who is liable to whose accounts go on the public register.
With a subsidiary, the local company signs the contracts, employs the staff and carries its own liabilities. The German parent is a shareholder. With a branch, there is no separate company: the GmbH or AG is the contracting party, and anything done in Australia or Singapore is done by the German company directly.
| Question | Australia | Singapore |
|---|---|---|
| Subsidiary: minimum directors | One for a proprietary company, who must ordinarily reside in Australia (s 201A(1)) | At least one director ordinarily resident in Singapore (s 145(1)) |
| Subsidiary: company secretary | Not required for a proprietary company; if appointed, one must ordinarily reside in Australia (s 204A(1)) | Required; must have his or her principal or only place of residence in Singapore (s 171(1)) |
| Subsidiary: minimum shareholders (members) | One (s 114) | One (s 20A) |
| Branch: registration | Before carrying on business, or an application lodged (s 601CD(1)) | Before establishing a place of business or carrying on business (s 368(1)) |
| Branch: local representative | A local agent resident in Australia (ss 601CF, 601CG) | One or more natural persons resident in Singapore as authorised representatives (s 368(1)(e)) |
| Branch: annual accounts | The German company's balance sheet, cash flow statement and profit and loss statement (s 601CK(1)) | The German company's accounts and separately audited accounts of the Singapore branch (s 373) |
References are to the Corporations Act 2001 (Cth) and the Companies Act 1967 (Singapore).
One director who lives there
Both countries require at least one director of a local company to live locally, and neither lets the German managing directors satisfy that from Germany. The other directors of a proprietary company can be anywhere. The Australian rule for a proprietary company, the Pty Ltd that a subsidiary normally is, is short:
A proprietary company must have at least 1 director. That director must ordinarily reside in Australia.
Corporations Act 2001 (Cth) s 201A(1)
The Singapore rule is to the same effect:
Every company must have at least one director who is ordinarily resident in Singapore and, where the company only has one member, that sole director may also be the sole member of the company.
Companies Act 1967 (Singapore) s 145(1)
Neither provision defines "ordinarily resident" or "ordinarily reside". Singapore adds two rules that Australia does not state in the same terms. The last resident director cannot resign until another is in place, and a purported resignation in breach of that is invalid (s 145(5)). And if a company carries on business for more than six months without a resident director, a member who knows it is doing so is liable for the debts contracted after those six months (s 145(10)). For a wholly owned subsidiary, that member is the German parent.
What the resident director takes on
A resident director is a director in every sense, with the full statutory duties, whatever the arrangement with the parent says. Neither Act reduces the duties of a local or nominee director.
In Australia, every director must act with the care and diligence of a reasonable person in the company's circumstances and office (s 180(1)), and has a duty to prevent the company trading while insolvent (s 588G). In Singapore, a director must at all times act honestly and use reasonable diligence in the discharge of the duties of the office (s 157(1)). We have set out the Australian duties and the annual compliance calendar in directors' duties and the compliance calendar for an Australian company.
The parent is not insulated either. In Australia, a holding company contravenes s 588V where its subsidiary incurs a debt while insolvent and the holding company, or one of its directors, is aware, or should reasonably be aware, of grounds for suspecting insolvency.
Hiring a resident director in Singapore
Since 9 June 2025, a person who acts as a nominee director of a Singapore company by way of business must be a registered corporate service provider, or be arranged through one (s 145A). The rule does not apply to a person acting as nominee director of a company that employs them, or of a company related to their employer. A German group that seconds its own employee to Singapore is in the second category.
The branch route puts the German company on the local register
A branch is quicker to explain and heavier to run than it looks, because the obligations fall on the German company itself. In Australia, a foreign company must not carry on business unless it is registered, or has applied to be registered (s 601CD(1)). The application goes to ASIC with a certified copy of the certificate of incorporation, a certified copy of the constitution, a list of directors and the addresses of its registered office at home and in Australia, and ASIC allots an Australian Registered Body Number, or ARBN (s 601CE).
Registration requires a local agent: a natural person or a company resident in Australia and authorised to accept service on the company's behalf (ss 601CF(2), 601CG(1)). The local agent is answerable for everything the foreign company must do under the Act, and is personally liable to a penalty imposed on the company if the court is satisfied that the agent should be (s 601CJ). Singapore's authorised representative carries a similar burden, stated the other way round: personally liable unless he or she satisfies the court otherwise (s 370(2)).
Once registered, an Australian branch must keep a registered office that is open, with a representative present, during set hours on each business day (s 601CT(1); in Singapore s 370(1) requires a registered office), and must show its name, ARBN and place of origin on its public documents, together with notice of limited liability where that is not apparent from the name (s 601DE(1)).
The accounts are the point to look at closely. Each year, a registered foreign company in Australia lodges copies of its own balance sheet, cash flow statement and profit and loss statement, in the form its home law requires (s 601CK(1)). Those are the German company's accounts, not accounts of the Australian operation. ASIC can exempt specified foreign companies from the requirement (s 601CK(7)); whether any exemption reaches a German company is a question for the accountant. Singapore asks for the German company's accounts and, separately, audited accounts of the Singapore branch (s 373). And on the Australian branch route, the Australian Business Registry Services (ABRS) states that a director of a registered foreign company needs a director identification number: that is every director of the GmbH, wherever they live.
Running a subsidiary from year to year
The subsidiary keeps the German company off the local register, at the cost of a second company to run. Each jurisdiction has its own annual rhythm, and the parent's finance team should know it before the first year end.
In Australia, a company must have a registered office in Australia (s 142(1)). Every director of the Australian company, including those who live in Germany, must hold a director identification number, and should apply for one before being appointed (s 1272C). Directors resident outside Australia apply too; ABRS explains the process.
Financial reporting depends on size. A small proprietary company does not generally have to prepare a financial report, but it does where it was controlled by a foreign company during the year and is not consolidated in financial statements lodged with ASIC by a registered foreign company or an Australian company (s 292(2)(b)). The Act states the size thresholds and lets the regulations prescribe different ones; which figures apply, and which reports, audits and reliefs follow, is a question for the accountant in the first year, not the last.
In Singapore, the company must appoint an auditor within three months of incorporation (s 205(1)) unless it is exempt. A subsidiary qualifies for the small company audit exemption only if it is a small company and part of a small group (s 205C(4)), and the Thirteenth Schedule (para 12) measures the group from the ultimate parent. A subsidiary of a German group that is not itself small should plan for an audit and confirm the position with the accountant. The company holds its annual general meeting within six months of its financial year end (s 175(1)), subject to the private company rules, and files an annual return within seven months (s 197(1)). The secretary's office must not be left vacant for more than six months at any one time (s 171(4A)), and a sole director may not also be the secretary (s 171(1E)).
Before there is a base: selling into the region from Germany
A German company can do a good deal in either country before it needs a local entity, but neither Act offers a safe harbour list to rely on. In Australia, a body corporate with a place of business here carries on business here (s 21(1)). Section 21(3) then lists activities that do not, merely of themselves, amount to carrying on business: maintaining a bank account, selling through an independent contractor, soliciting orders that become binding only when accepted outside Australia, an isolated transaction completed within 31 days, and investing funds or holding property, among others. Singapore's s 366(2) is drawn in almost identical terms.
Two cautions. The exclusions qualify the wider rule; they do not replace it, and whether a company is carrying on business is a question of fact about everything it does. And holding the shares of a local subsidiary is holding property, which both Acts list among the activities that do not of themselves amount to carrying on business, so the parent does not have to register as a foreign company merely because it owns one. What its own people then do in the country is a separate question.
Selling into Australia before establishing there brings its own legal points, the most expensive being retention of title, which does not protect a German supplier against the buyer's insolvency unless it is registered. We have written that up for exporters in the PPSA trap for German exporters.
The contracts that make the structure work
Incorporating the company is the smaller part of the legal work. The group's contracts with it are the larger part, and they are what the tax analysis will test. A regional subsidiary needs a documented basis for everything that passes between it and the parent: what it buys and resells, the services it provides or receives, the intellectual property it uses, and how it is funded.
- Distribution or agency. Whether the subsidiary buys and resells the parent's products or sells them on the parent's behalf changes who holds the customer contracts and who carries the stock and the credit risk.
- Services. Management, IT and support provided by the parent, or regional services provided by the subsidiary to the group.
- Licence. The right to use the brand, software and know-how, and on what terms.
- Funding. Share capital, an intercompany loan, or both, and the terms of any loan.
- Disputes. A clause that says where a dispute between group companies, or with regional customers, is decided, and on what rules. Our guide to arbitration clauses, the SGH and SIAC covers the four decisions a clause makes.
The lawyer writes these agreements and the accountant prices them. How Australian law looks at those prices, and why the agreement has to match what the companies actually do, is the subject of our transfer pricing guide for German groups.
People are the other half. A German manager who relocates to run the region needs a visa with work rights in Australia, or a work pass in Singapore. The Singapore Ministry of Manpower states that a foreign director who does not live in Singapore does not need an Employment Pass to be a registered director. A resident director is a different matter, and the immigration route has to be settled before the appointment, not after. The Accounting and Corporate Regulatory Authority treats a Singapore citizen, a permanent resident, or the holder of an Employment Pass, Personalised Employment Pass or Overseas Networks and Expertise Pass as meeting the residency requirement, and states that an Employment Pass holder must first obtain a Letter of Consent from the Ministry of Manpower.
Where the accountant takes over
The structuring decision is usually settled by tax, and the tax numbers are needed before the lawyers draft. Incorporating first and asking the tax question afterwards is how a group ends up with an entity in the wrong place, or the right entity holding the wrong contracts.
The questions the accountant answers include:
- whether a branch creates a permanent establishment of the German company, and where the subsidiary's management and control will be taken to sit;
- corporate tax in each country, and withholding on dividends, interest and royalties under the Germany and Australia, or Germany and Singapore, double tax agreement;
- whether the German controlled foreign company rules in the Außensteuergesetz reach the regional company's income;
- transfer pricing documentation for the intercompany agreements;
- registrations: in Australia an ABN, a tax file number, GST and PAYG withholding, a public officer and superannuation for employees; in Singapore, GST where the threshold is reached;
- the Australian director penalty regime for unpaid tax and superannuation, and what it means for the resident director;
- the global minimum tax position, for groups within its scope.
We work with Accru Felsers on accounting and tax, through the German Professional Services Alliance, and the sequence we follow is the one above: the accountant's answer first, then the entity, then the contracts.
The order, as a checklist
The legal steps are short once the commercial and tax decisions are made, and the expensive mistakes are steps taken out of order.
Before incorporating
- Decide which entity will hold the regional customer contracts and employ the regional staff.
- Take the tax advice on branch or subsidiary, Australia or Singapore, with both sides of the group in view.
- Identify the resident director and confirm the immigration position if that person is relocating.
- Have every director apply for an Australian director identification number before appointment.
At incorporation or registration
- Registered office, directors and, in Singapore, a secretary in place.
- On the branch route, a local agent in Australia or an authorised representative in Singapore, and the German company's accounts ready for annual lodgement.
Before trading
- Intercompany agreements signed, matching what the companies will actually do.
- A dispute clause in the group contracts and the customer terms.
- Year end, audit and reporting obligations diarised in each country.
Advice on a Singapore entity is given by lawyers qualified in Singapore. The Australian side is described on our German desk and international services pages, and the regional picture on our Singapore page.
