Comparison
Subsidiary, branch office or liaison office in Nepal
A foreign company entering Nepal has three routes in. They differ on what you are allowed to earn, who carries the liability, and how hard it is to take profit out again.
The choice is usually made on setup speed, which is the wrong criterion. Permitted activity and repatriation are what determine whether the entity can do the job you set it up for.
Confirm the current position with the Department of Industry before committing. Sector restrictions and approval practice change, and a structure chosen against last year rules is expensive to unwind.
Reviewed September 2026
| Subsidiary (Pvt Ltd) | Branch office | Liaison office | |
|---|---|---|---|
| What it is | A Nepali company owned by the foreign parent. | The same legal entity as the parent, registered to operate in Nepal. | A representative presence only. |
| Can it earn revenue in Nepal | Yes, within its registered objectives. | Yes, but generally limited to the activity approved, often tied to a contract or project. | No. It cannot trade or invoice. |
| Parent liability | Ring-fenced. The parent risk is its investment. | Full. The parent is liable for what the branch does. | Full, though exposure is limited by the lack of trading. |
| Approvals | Department of Industry FDI approval, OCR registration, NRB recording of the investment. | Sector regulator or line ministry permission, then OCR registration as a foreign company. | Permission from the relevant authority, renewed periodically. |
| Taxation | Nepali corporate rate on its own profit, 25% in most sectors. | Taxed on Nepal-source income, with the branch profit position depending on the treaty where one applies. | No trading income, though payroll and withholding obligations still arise. |
| Taking money out | Dividends and capital repatriable, provided the investment was recorded with NRB at the time it came in. | Remittance of branch profit, subject to approval and tax clearance. | Not applicable. Funded by the parent. |
| Setup effort | Heaviest, and the most durable. | Moderate, and usually tied to the life of a contract. | Lightest. |
| Suited to | Long-term market entry, local hiring, local customers. | A specific awarded project or contract in Nepal. | Market study, liaison, sourcing, with no revenue. |
Which route
Choose a subsidiary if you intend to stay. It is the only route that ring-fences the parent, hires and contracts cleanly in its own name, and has a repatriation path that is well understood by the banks.
A branch office suits a foreign contractor awarded a specific project in Nepal, where setting up a permanent company would outlast the work. Understand that the parent carries the liability directly.
A liaison office is for looking, not earning. Businesses sometimes register one and then start invoicing through it, which creates a permanent establishment problem and a tax exposure nobody priced.
The single most costly mistake we see is money entering Nepal without being recorded with Nepal Rastra Bank. It is easy at the time and very hard afterwards, and it is what blocks repatriation years later.
Questions people ask
- Can a foreign company own 100% of a Nepali subsidiary?
- In many sectors, yes. Some sectors are restricted or closed to foreign investment and others carry conditions, so the answer depends on the activity you register. Check the current negative list before drafting objectives.
- Is there a minimum foreign investment amount?
- Yes. The minimum foreign investment is NPR 2 crore per foreign investor, reduced from NPR 5 crore in 2022. It applies per investor rather than per company, and the Department of Industry can confirm whether any sector-specific minimum also applies to your activity.
- Why does NRB recording matter so much?
- Repatriation of dividends, capital and proceeds on exit is permitted against investment that was properly recorded when it entered. If the inflow was never recorded, the money is in Nepal and getting it out becomes a remediation exercise rather than a filing.
- Can a liaison office employ staff in Nepal?
- It can have a representative presence, with the payroll and withholding obligations that follow. What it cannot do is generate revenue, and using staff to close sales is the point at which a tax exposure arises.