GTM Glossary · Market Entry
Legal Entity vs. Branch
The choice between founding a separate local company, such as a GmbH, SAS, or BV, and registering a dependent branch of the parent.
[01]What It Means
A subsidiary is its own legal person with its own liability, accounts, and governance. A branch is an extension of the foreign parent, faster to register but with the parent exposed and, in some tenders, treated as a weaker counterparty.
[02]Why It Matters
European enterprise procurement and public tenders often score the contracting party. A local GmbH or SAS can be the difference between being evaluated and being filtered out, independent of product quality.
[03]Where It Goes Wrong
Choosing a branch for speed in a market where public buyers require a domestic entity.Underestimating ongoing accounting, audit, and filing duties of a subsidiary.Founding an entity before the ICP is validated, which converts a test into a fixed cost.
[04]Related Terms