Registering a branch is often a popular option among foreign investors interested in doing business in Peru. Because not only is it generally much faster to form a branch than to go through full company formation, but you will also benefit from the brand recognition and visibility associated with your parent company. Moreover, when you register a branch in Peru, you maintain a higher degree of control over the entity than if you registered a subsidiary.
Peru has undergone 18 years of consistent growth and is the sixth-largest economy in Latin America by gross domestic product (GDP), which in 2019 reached $226.8 billion (all figures in USD). That year is also registered a low inflation rate of 1.3 percent, while recording $8.9 billion of foreign direct investment (FDI) inflows.
The Andean country maintains an investment-friendly environment, and has numerous free trade agreements (FTAs) in force with the likes of Canada, Chile, the EU, Japan, Mexico, and the United States. Peru is also a founding member of the Pacific Alliance, a regional economic association that also includes Chile, Colombia, and Mexico.
During the last two decades, Peru has experienced a boom in the export of agricultural products such as fruits and vegetables, which has contributed to reducing poverty in rural areas of the country from 80 percent in 2004 to 36 percent in 2018. Peru’s most important export commodities include precious metals, hydrocarbons, machinery, and vehicles, with the country’s most important export destinations including China, India, Japan, South Korea, and the United States.
If you are considering expanding your business into the South American nation, read on to learn how to register a branch in Peru, or go ahead and contact us now.
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What is a branch?
A branch is an extension of a parent company located overseas that is not established as a separate legal entity, as a subsidiary would be. That means that despite operating in another country, a branch will always be managed and dependent upon the headquarters. Because of this, when you register a branch in Peru, you are able to get to work much sooner than if you go through the more time consuming process of forming a company.
Note that, unlike subsidiaries, a branch does not have its own legal personality and as it is mostly managed from outside Peru, in some instances legal and tax liability will extend to the parent company. Nevertheless, a branch in Peru can be autonomously supervised by a local manager or director, who is usually appointed by the main office.
How to register a branch in Peru
To register a branch in Peru, known in Spanish as ‘sucursal,’ a public deed of incorporation is required along with the following documentation:
- Certificate of good standing
- A document certifying that nothing prevents the parent company from forming a branch abroad
- Copy of the social statuses of the parent company
- A document that confirms the creation of the branch in Peru, indicating the assigned capital, the activities that the branch will develop, physical address, and the appointment of one or more legal representatives
- Powers of attorney granted to the branch’s legal representative, who will represent the company before local authorities, partners, and clients, and will have the power to resolve many issues related to branch operations that may arise.
Note that this public deed of incorporation must be presented in Spanish and can be approved in two different ways:
- If the documents presented adhere to the Apostille Convention of the Hague Conference on Private International Law (HCCH), the Ministry of Foreign Affairs of Peru will be in charge of validating the formation of the branch in the country.
- Otherwise, the documents must be presented to the Peruvian consulate located in the country where the parent company operates and then submitted before the Ministry of Foreign Affairs of Peru.
Advantages of registering a branch
Some of the main advantages of registering a branch in Peru include:
Centralized control: Unlike other types of companies in Peru, a branch offers a greater level of control to the parent company. This means that the business practices of a branch can always be supervised and, where necessary, corrected by the parent company.
Lower costs: The costs involved in branch formation in Peru are much lower than to form a new company in the country. As such it represents a more cost-effective market entry strategy that means you will either be ready for overseas expansion sooner, or that you can allocate funds to other concerns.
Tax benefits: If you decide to register a branch in Peru, you will be able to access the double taxation treaties reached by the South American nation.
Market recognition: Your branch in Peru can benefit from the brand visibility and reputation that your company has already acquired abroad, which means that your business will remain competitive, increasing the chances of profitability.
Biz Latin Hub can help you register a branch in Peru
At Biz Latin Hub, our experienced team of multilingual company formation specialists is equipped to help you register a branch in Peru in the shortest time possible. With our full suite of legal, accounting, HR, and back-office services, we can be your single point of contact to successfully do business in Peru or anywhere else in Latin America and the Caribbean.
Reach out now for further advice or a free quote.
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