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Opening a foreign company’s representative office in Shanghai, China. Service offer

Setting up a representative office (RO) in Shanghai allows foreign companies to establish a presence in China without forming a separate legal entity. ROs can have bank accounts, employ staff, and operate an office but can't directly make profits.

Contents

  1. Main requirements
    1. Name of the representative office
    2. Requirements for the parent company
    3. Business activity
    4. Share capital
    5. Address
  2. Basic structure of the representative office
    1. Chief Representative
    2. General Representative
  3. Registration of a representative office
  4. Further administration of the representative office
  5. Fees for basic services*

Main requirements

Name of the representative office

  • must follow the following format: Country of incorporation of the parent company + name of the parent company (translated into Chinese) + Shanghai Representative Office;
  • must be entirely in Chinese (English names are used for reference only).

Requirements for the parent company

The parent company must be registered no less than 2 years ago and have an active bank account.

Business activity

  • RO's activities must coincide with the activities of the company establishing the RO;
  • RO may not directly engage in operating activities for profit; RO is prohibited from signing contracts and receiving income from any activities in China;
  • RO may be engaged in promotion of the company's products, market research, technology exchange and other permitted activities that do not involve direct profit making;
  • If there are restrictions on the core business activities of the foreign parent company, a special license or permit may be required for registration of the RO.

Share capital

Since RO is not a separate legal entity, there are no restrictions on the share capital amount; there are also no requirements for the share capital of the foreign parent company.

Address

The registered address of the representative office must be located in a commercial building.

Basic structure of the representative office

Chief Representative

  • at least 1;
  • natural persons only;
  • no residency requirements (may be either a Chinese resident or a foreign person);
  • if a foreign person is planning to relocate to China, a work visa will be required.

General Representative

  • optional;
  • not more than 3;
  • natural persons only;
  • no residency requirements (may be either Chinese residents or foreigners);
  • if a foreign person is planning to relocate to China, a work visa will be required.

Registration of a representative office

The procedure of registration of a representative office and obtaining a license takes about 4-6 weeks.

The registration steps are as follows:

1. It is necessary to determine:

  • the name of the representative office in order to check its uniqueness (should be in line with the above-mentioned requirements);
  • the structure of the RO (Chief Representative, General Representatives – at the initial stage).

2. Payment for services

3. It is necessary to provide the following documents and information:

Constitutional documents of the parent company*, documents confirming the total value of assets of the parent company.
IMPORTANT: the documents should be legalized (in the country of registration of the parent company) or apostilled.

All documents must be in Chinese or with a certified Chinese translation.

For the Chief Representative and other representatives (if any):
  • Resolution for appointment signed by the authorized person (director) of the parent company;
  • Copy of the passport** / ID card;
  • Curriculum Vitae (from the age of 18 up to the present);
  • Color passport-sized photograph (3.5 х 4.5 cm, white background);
  • For non-residents of China who plan to work in China:
    • Date of coming to China,
    • Document confirming the residential address in China,
    • Chinese mobile phone number.

A lease agreement for the premises in China to be used by RO. Such an agreement shall be executed by the parent company.

The agreement must specify that the premises are for the use of the representative office only and the lease term must be at least 12 months.

For each representative office, a service contract and an audit services agreement will be signed with the beneficiary and a questionnaire with the client's data should be filled in.

*The list of documents will depend on the country of registration of the parent company, its legal form and structure.

**Original passport may be requested – in such case it may be necessary to arrange a personal visit to China or send the original passport to China by courier.

4. Preparation and submission of a set of documents for registration of a representative office:

Once the name has been verified, it is possible to proceed to the preparation of documents for the registration of the representative office. As part of the registration procedure, the following activities shall be carried out:

  • Submission of 2 applications on behalf of the parent company and the RO to local government authorities;
  • Submission of applications for approval of seals to the Public Security Bureau, and making such seals after obtaining such approval;
  • Opening a bank account (savings/checking account).

At the end of registration, a set of constitutional documents will be prepared, containing:

  1. Permanent RO Registration certificate;
  2. Resident Chief Representative Certificate;
  3. Official seal of the RO;
  4. Financial seal of the RO;
  5. Seal of the Chief Representative;
  6. Рermit for opening a bank account.

For an additional fee, it is also possible to order:

  • Tax registration certificate issued by the State Administration of Taxation;
  • Tax registration certificate issued by a local tax authority.

Further administration of the representative office

As soon as the representative office in Shanghai is officially registered, various filing and reporting obligations (monthly, quarterly and annually) must be fulfilled.

The statutory requirements include:

  • filing monthly tax returns,
  • filing an annual audit report prepared and signed by a local accounting firm (Certified Public Accountants / CPAs),
  • filing annual tax returns with the Shanghai State Tax Administration,
  • filing an annual report with the business licensing bureau, etc.
Failure to comply with any of these requirements within the prescribed timeframe may expose the representative office to fines or risk license suspension or revocation by the Administration for Industry and Commerce (AIC).

Fees for basic services*

Services
Fees
Total cost of registration (including government fees, preparation and submission of original constituent documents of the representative office and its seals)

Does NOT include the cost of translation of documents into Chinese.
EUR 5 500
Renting a registered office address
EUR 3 500 / year
Selection of office space:

== GSL services on selection of office space, negotiation of lease agreement and arrangement of its signing will be charged on an hourly basis at the rate of USD 300 / hour with a report on actions performed

USD 300 / hour
(minimum deposit – USD 1 200)
== GSL agency fee in case of signing a lease agreement (one-off fee)
10% of the annual rent payment amount
== rent per month (a 2 months security deposit should be paid to the landlord)
from USD 800 / month
(small office for 1 – 2 employees)
Assistance in opening a bank account
EUR 3 950
Accounting service

To be deposited on a quarterly/half-year basis: EUR 900 / EUR 1 800 accordingly.
EUR 300 / month
Operational assistant for interaction with the bank, accountant and tax authority

To be deposited on a quarterly/half-year basis: EUR 3 600 / EUR 7 200 accordingly.
EUR 1 200 / month
Mandatory annual reconciliation with tax authorities (to confirm the absence of tax debt) – (CIT Clearance Service)
from USD 1 250 / year
Conducting a mandatory annual review of the submission of various business registration information to regulatory authorities, including the Administration for Market Regulation, customs and tax authorities, and State Administration of Foreign Exchange (Annual Inspection Service)
from USD 1 500 / year
Compliance fee

Paid in case of:
- registration of a representative office;
- renewal of the representative office;
- liquidation of the representative office;
- transfer to another agent;
- appointment of a new representative (chief/general);
- change of director / shareholder / beneficial owner of the parent company;
- signing of documents.
USD 350 (standard rate, includes the check of 1 individual)

+ USD 150 for each additional individual or legal entity if such legal entity is administered by GSL

+ USD 200 for each additional legal entity if such legal entity is not administered by GSL

USD 450 (rate for high-risk companies, includes the check of 1 individual)

USD 100 (signing of documents)
Employees
Obtaining a work visa per one employee (including the Chief Representative)
from USD 3 400
Drafting a labor agreement to be executed with the representative in accordance with the law of the PRC
from USD 1 200
(4 hours of work of a specialist; in case of preparation of non-standard contracts, additional billing will be made based on the actual time spent at the hourly rate of the specialist)
Monthly tax return filing for one employee:
== for a foreign employee working in China
from USD 750 / month
== for a foreign employee working outside China (zero return)
from USD 200 / month
Monthly payroll per foreign employee working in China
from USD 150 / month

*The fees are valid as of August 2024.

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from EUR 5 500
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