Liaison Office Vs Project Office Vs Branch Office - Comparison

Updated on January 28, 2026 08:14:24 AM

While planning to open a subsidiary company in India, it is important to know about the types of subsidiary company that can be incorporated in India. In this article, we will do a comparison among liaison offices, branch offices, and project offices, highlighting the key differences among the three.

As one of the leading professionals in international business incorporation, Professional Utilities would like to provide you with an overview that gives valuable insight and enables you to make the proper informed decisions regarding your company's global expansion strategies.

When businesses expand their operations across national borders, they usually set up offshore entities through which they can operate internationally. The available options for foreign investors to establish a subsidiary company include liaison offices, project offices, and branch offices, all of which serve different objectives and offer different merits and disadvantages.

Table Of Content

Types of Offices under Subsidiary company 

1. Liaison Office

A liaison office or a “representative office” is basically a communication platform between the parent company and the potential clients or partners in the foreign country. The main aim of establishing this type of office is to ensure proper communication:  

An important consideration that must be made is that in a liaison office, commercial or revenue-generating activities are not allowed, meaning that a liaison office cannot itself conduct revenue-generating business.

The main objective of establishing a liaison office is to undertake market research, collect related business intelligence, and market the parent company’s services/products offered in the host country.

A liaison office is considered non-trading, resulting in it having some drawbacks, such as it not being able to enter into contracts or business agreements on behalf of the parent company.

2. Project Office

A project office, on the other hand, is set up for executing particular projects within the host country in the interest of the parent company. This differs from a liaison office in a number of core aspects:

The main objective of the project office is the execution of individual projects or contracts obtained by the parent company in the foreign country. Such projects can be for a short term, and the existence of the office comes to an end after the successful completion of the project task.

In contrast to the liaison office, a project office is allowed to earn income within the context of the project they are involved in.

The project offices are required to comply with all the local legislation and taxation laws of the host country so that they can efficiently carry out their operations.

3. Branch Office

A branch office is a prolongation of a parent company, which carries out business operations like a parent company. Main points of branch office are:

Compared to a liaison office, a branch office is given the right to carry out business activities as well as generate revenue within the foreign market.

A branch office may make contracts, conduct business transactions, and engage in other business transactions on behalf of the parent company.

The branch office continues to be under the legal jurisdiction of the parent company, and any outstanding liabilities are payable by the parent company.

Tabular Comparison of Liaison Office vs. Project Office vs. Branch Office

Criteria	Liaison Office	Project Office	Branch Office
Nature of Operations	Non-trading entity	Project-based activities	Trading entity
Revenue Generation	Cannot generate revenue	Permitted to generate revenue within projects	Authorized to engage in commercial activities
Operational Limitations	Cannot sign contracts or conduct business deals	Full compliance with local regulations	Can sign contracts and conduct business deals
Duration	Indefinite existence	Exists only for the duration of the project	Exists as long as the parent company exists
Purpose	Market research and promotion	Execution of specific projects	Business expansion and operations
Taxation	Generally taxed at parent company's location	Subject to local tax laws in host country	Subject to local tax laws in host country
Liability	Parent company liable for all office activities	Parent company liable for project-related tasks	Parent company liable for branch-related tasks

Conclusion

The selection of the right offshore entity becomes one of the most imperative decisions you may ever have to consider, impacting seriously on the success or otherwise of your company's international expansion. There is, for instance, a liaison office, which would be quite appropriate for carrying out market research and building relationships. For project-oriented initiatives where earning is a possibility, you will find that a project office is more applicable. On the other hand, a branch office will give a wider and more independent presence in the foreign market, with the facility to engage in commercial activities.

Both have their pros and cons, and the choice will depend on what you want to achieve in your business. It would be advisable for you to take advice from legal and business experts before making a final decision. To acquire expertise for determining which office should be opened as a subsidiary company in India, it is best to consult professionals at Professional Utilities.