Entities
Subsidiary
A subsidiary is a company controlled by another company, its parent, usually through majority ownership of its shares or membership interests. A subsidiary is a separate legal entity with its own filings, liabilities and tax obligations.
In plain terms: A company owned by another company. Still has to do its own paperwork.
Why it matters
Founders expanding across borders often end up with a US parent and a local operating subsidiary, or the reverse. Each entity files separately in its own jurisdiction, and transactions between them raise transfer pricing questions that are easier to answer if documented from the start.
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