Everything you need to know to set up an operating company with a bank account.
Banks are partially subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).
Banks are largely required to maintain sufficient records of their customer and transaction data for law enforcement (old FATF recommendation 10 / new FATF recommendation 11).
Banks and / or other covered entities are required to report large transactions in currency or other monetary instruments to designated authorities.
The national administration has sufficient powers to obtain and provide bank information on request without qualifications.
There are undue notice and appeal rights against the exchange of bank information on demand without qualifications.
The key features of a limited liability company in India are that it can be incorporated with i) a minimum paid-up capital of US $ 1.650 (INR 100.000) ii) two directors and iii) two shareholders. Although the shareholders can be of any nationality, at least one director must be a resident of India.
All directors and shareholders must register their personal data for public records. All Directors must also obtain Director Identification Number (DIN) and Digital Signature Certificate (DSC) numbers. Read more about the steps required to register an Indian limited liability company.
Best Uses: Setting up a limited liability company in India is our recommended strategy to enter the local market and limit liability for foreign investors. This entity is ideal for export and direct sales, manufacturing and software development. Foreign investors can access a wide range of government subsidies with this entity.
Foreigners can register limited liability companies in India. According to the Limited Partnerships Act 2008, all partners benefit from limited liability for the activities of the partnership and there is no fixed minimum contribution. Companies formed by non-resident foreigners must appoint a manager who is resident in India.
A limited liability company in India must submit annual financial statements to the Indian tax authority. The returns must be audited, unless the company receives income of less than US $ 500 (INR 40,000) and has assets below US $ 375 (INR 25,000).
Best Uses: A limited liability company is flexible and subject to fewer compliance rules than an LLC. Your income is also directly taxed at the partner level.
Registering a company with an EPZ is attractive to investors who plan to manufacture products in and export from India. Company registration requirements are the same as for a standard limited liability company, although some free zone authorities require owners to allocate higher amounts of paid-up capital.
Best uses: manufacture of products for export to foreign markets.
A private trust in India is governed by the Indian Trusts Act 1882 and involves three parties: i) a settlor, also known as the author of the trust, ii) a trustee, and iii) a beneficiary.
A trust can be revocable or irrevocable, depending on the Client's needs.
The object of the trust is called fiduciary property, which must be registered under the Registration Law of 1908.
Best Uses: For multigenerational Indian families to create succession in business and wealth, education, health care, and religious motives.
This entity works only within the scope defined by the parent company. In India, a branch can be engaged in trade, professional consulting, export / import of goods, invoicing and signing contracts.
A branch incorporated in a Special Economic Zone (SEZ) can only carry out commercial activities within the zone itself.
To incorporate a branch, you must obtain approval from the Reserve Bank of India (RBI)
Best Uses: Indian branch registration is not recommended. This entity is subject to the 43% corporate tax and presents a higher risk of liabilities directly borne by the parent.
In India, a representative office is known as a liaison office. A liaison office helps the parent company ai) promote exports / imports to and from India and ii) promote technical and financial collaborations with other resident companies. Consequently, this entity acts as a communication channel between the parent company and potential customers / suppliers in India.
Best Uses: A liaison office is a good choice if you want to test the Indian market before commit significant resources by establishing a permanent establishment in the country. Is a non-revenue generating entity, so it is also ideal for providing after-sales customer support to local customers.
This entity can be configured to execute a specific contract for a specific period of time
within India. Once the project is complete, the entity is canceled.
The operations of a project office are taxed like those of a branch office. Shipping of earnings outside of India is allowed, subject to current exchange controls.
A project office is much easier to terminate than a permanent establishment (branch and / or subsidiary).
Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.
We help our Clients overcome this challenge in the following ways:
DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).
LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).
D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).
UAn established Indian company must have a minimum of 2 directors and 2 shareholders, with the exception of a one-person company. Both directors and shareholders can be the same people. At least one in two directors must reside in India.
There is no minimum paid-up share capital criterion when setting up a company in India.
If the paid-up share capital of the company exceeds US $ 694.445 (INR 50.000.000), the appointment of a resident company secretary is mandatorily required.
Every applicant, whether a proposed director or proposed subscriber, must have a valid Digital Signature Certificate (DSC). Professionals such as certified public accountants, business secretaries, and cost accountants must also obtain DSC for online document certification.
Before incorporating a branch or liaison office, prior approval from the Reserve Bank of India (RBI) is required. In addition, parent companies must submit their latest audited balance sheets showing assets worth at least US $ 100.000 (in the case of a branch) and at least US $ 50.000 (in the case of a liaison office).
All listed companies in India must have at least one third of their directors as
For all companies, it is voluntary to protect their trademark through trademark registration in India.
PIt may take up to 4 months for simple India LLC company registration and corporate bank account opening. That's due to the amount of paperwork involved and the government approvals required.
Businesses should regularly contact government authorities for business licensing and approval issues. The Indian bureaucracy is famous.
India's infrastructure is poor.
Labor unrest can be a problem in India, as labor disputes and strikes affect productivity.
Clients find it difficult to trust the Indian regulatory system to protect their business interests from corruption.
Patent and licensing guidelines favor local manufacturers over international players.
The Indian rupee is volatile, which affects the value and profitability of foreign investments in India.
The corporate tax rate for a resident company is 34%, while for a branch of a foreign company it is 43%.
Additional taxes and levies include i) VAT at 14%; ii) import and export duties at an average rate of 12%; iii) 12% central special tax; iv) tax on dividends at 20% and v) employer contributions to social security at 12%.
Our Clients must settle their TDS (tax withholding) claims applicable to the remitted amount and submit i) Form 15CA to the Income Tax Department; ii) Form 15CA and Form 15CB to the Reserve Bank of India (RBI) and Form A2 to the bank.
India's population is expected to exceed China's in 2024. A high population means high internal competition for foreign investors.
Regional diversity means that each state in India has a different business culture. It is not possible to make the same business plan work across the country. This increases planning and configuration costs.
The insolvency of a company in India takes an average of four years. This is higher than the average for South Asia and the OECD. This is due to the large amount of paperwork and the inevitable formalities of the court systems. In addition, a lot of field work is required to achieve insolvency. It is challenging to achieve this online
The national business registry includes the identity information of the legal owner.
Information on legal owners is not always available online (up to 10 EUR / GBP / USD).
All businesses require the registration of all legal owners.
All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications, or incorporation numbers are always registered.
Updating proprietary information is not mandatory for all partners.
All companies require registration of all beneficial owners at a threshold of more than any stake / influence, up to 10%.
Updating the information on the identity of the final beneficiaries is mandatory.
Real property is not always available online (up to 10 EUR / GBP / USD).
It is mandatory to carry accounting data.
There is an obligation to present annual accounts for all types of companies.
Business accounts are not always online (up to € 10 / US $).
No country-by-country public reporting at all.
The secondary mechanism is subject to the restrictions imposed by the OECD model legislation; or no secondary mechanism (only the ultimate national parent entity has to present the CbCR.
Unilateral cross-border tax rulings (eg advance tax rulings, advance tax rulings) are available in laws or regulations, or administrative practice. Some unilateral cross-border tax rulings are posted online for free.
The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.
The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory for some financial market operators.
The use of an annually updated LEI for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory
Dividend payment: Unilateral double tax relief through a tax credit system for all three payment scenarios (beneficiaries always receive a unilateral tax credit, regardless of whether it is an independent or related legal person, or a natural person).
Interest payments: Unilateral relief for double taxation through a tax credit system for both payment scenarios (recipients always receive a unilateral tax credit, regardless of whether it is a legal person or a natural person).
None or restricted access to both criminal and civil tax procedures.
None or restricted access to both criminal and civil tax judgments / verdicts.
The jurisdiction does NOT issue or accept the circulation of large notes / cash notes of its own currency (of value greater than 200 EUR / GBP / USD).
Bearer shares are not available / not circulating.
Series LLC / Shielded Cell Companies are not available.
Trusts with escape clauses are not prohibited.
India is not currently on the FATF List of countries that have been identified with strategic AML deficiencies.
The last Mutual Evaluation Report related to the implementation of anti-money laundering and terrorist financing standards in India was conducted by the Financial Action Task Force (FATF) in 2010. Based on that evaluation, India was considered complies with 4 and largely complies with 25 of the 40 + 9 FATF Recommendations. Partially or non-compliant with 5 of the 6 main recommendations.
Overall non-compliance score with FATF standards in percentage: 46,5%. (100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective).
India signed the MCAA and pledged to exchange information on or before 2019.
The number of significant activated AEOI relationships (according to the MCAA) published by the OECD as of October 2019 is 95.
The international and digital banks They're available.
Real bank operations: 90%.
Type of visa: INR ₹, US $, €.
Joint accounts: SI.
Remote management account: To consult.
Asset management Depending on the rating of the company.
Rates: Depends on the type of account.
Credit / debit cards in local currency.
Crypto-friendly banks: It depends on the correspondent bank.
Portfolio availability: No or depends on the correspondent bank.
Ability to issue letters of credit: SI
Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.
Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.