How to Set Up a Branch Office in India from Denmark
A Branch Office is an extension of the Danish parent company in India — not a separate legal entity but a registered presence that can carry out specific commercial activities. Unlike a Wholly Owned Subsidiary, a branch office does not have its own corporate identity and the Danish parent bears full liability for its operations in India. This structure is commonly used by Danish companies that want to test the Indian market, provide professional services, or act as a buying/selling agent without setting up a full subsidiary.
India-Denmark bilateral trade reached USD 6.1 billion in 2024, and many Danish companies initially establish branch offices before transitioning to subsidiary structures. Major Danish firms including AP Moller Maersk, Vestas, and Grundfos maintain significant operations in India. The Green Strategic Partnership established between India and Denmark in 2020, combined with the Indo-Danish Business Council launched in November 2025, provides a favourable framework for Danish commercial expansion into India.
This guide covers the complete process of establishing a Branch Office in India from Denmark, including RBI approval, permitted activities, and ongoing compliance requirements.
FDI Route and Regulatory Requirements
Establishing a Branch Office in India requires prior approval from the Reserve Bank of India (RBI). Unlike subsidiary registration through the automatic route, branch office setup follows a separate regulatory pathway.
RBI Approval Process
The Danish parent company must apply for RBI approval through an Authorised Dealer (AD) Category I bank in India. The AD bank submits Form FNC (Foreign National Company) to the RBI on behalf of the Danish company. Key eligibility criteria include:
- The Danish parent must have a profit-making track record in its home country
- The net worth of the Danish parent should be adequate for the proposed operations (the 2025 RBI draft guidelines have removed the earlier minimum net worth requirement of USD 100,000)
- The proposed activities must fall within the permitted categories
Permitted Activities for a Branch Office
A Branch Office in India is restricted to specific activities as defined by the RBI:
- Export and import of goods
- Provision of professional or consultancy services
- Research work in areas where the Danish parent is engaged
- Promoting technical or financial collaborations between Indian companies and the Danish parent
- Representation of the parent company in India and acting as a buying/selling agent
- Information technology services and software development
- Technical support for products supplied by the Danish parent
- Foreign airline or shipping company operations
Key Restrictions
A Branch Office cannot:
- Engage in retail trading activities in India (except within SEZs)
- Undertake manufacturing or processing activities (except within SEZs)
- Carry out activities not specified in the RBI approval letter
Press Note 3 — Not Applicable to Denmark
Press Note 3 (2020) restrictions for investments from countries sharing a land border with India do not apply to Denmark. Danish companies do not require any additional security clearance for establishing a branch office.
DTAA Benefits for Danish Companies
The India-Denmark Double Taxation Avoidance Agreement, signed in 1989 and amended by Protocol in 2013, has important implications for branch office operations. A branch office typically constitutes a Permanent Establishment (PE) of the Danish parent in India, which means profits attributable to the branch are taxable in India.
Tax Treatment of Branch Office Income
- Corporate Tax: Branch office profits are taxed at 35% plus applicable surcharge and cess (compared to 25% for Indian subsidiary companies). This higher rate is a significant factor in the subsidiary vs. branch office decision.
- Interest: 10% for bank loans, 15% for other interest under the DTAA (domestic rate: 20%).
- Royalties: 20% under the DTAA. Applies if the branch pays technology fees to the Danish parent.
- Fees for Technical Services: 20% under the DTAA.
Profit Remittance
A branch office can remit profits to the Danish parent through an Authorised Dealer bank after meeting all tax obligations and obtaining a Chartered Accountant certificate confirming that all applicable taxes have been paid. The remittance is not subject to additional withholding tax beyond the corporate tax already paid, as it is treated as a transfer within the same legal entity.
Permanent Establishment Considerations
Since a branch office is by definition a PE of the Danish parent in India, the profits attributable to the branch under the DTAA are computed as if the branch were a distinct and separate enterprise dealing with the Danish parent at arm's length. Proper documentation of profit attribution methodologies is essential to avoid disputes with Indian tax authorities.
Document Requirements and Authentication
Both Denmark and India are members of the Hague Apostille Convention, simplifying document legalisation. Danish documents must be apostilled by the Ministry of Foreign Affairs (Udenrigsministeriet) at a fee of DKK 195 per document.
Documents for RBI Application (Form FNC)
- Certificate of Registration from Erhvervsstyrelsen (Danish Business Authority) — apostilled
- Board resolution of the Danish parent approving establishment of a branch office in India — apostilled
- Memorandum and Articles of Association (Vedtaegter) of the Danish parent — apostilled
- Audited financial statements of the Danish parent for the last 5 years — apostilled
- Details of proposed activities in India and projected financial statements
- Power of Attorney in favour of the authorised person to represent the branch — apostilled
- Details of the proposed branch manager and other key personnel
Documents for ROC Registration
- Form FC-1 (Registration of Foreign Company) filed with the Registrar of Companies
- Charter documents, statutes, or Memorandum and Articles of the Danish parent — apostilled and translated into English if in Danish
- List of directors and secretary of the Danish parent company
- Address of the registered or principal office of the Danish parent
- Name and address of the authorised representative in India resident in India
Apostille Process in Denmark
Documents must first be notarised by a Danish notary, then submitted to the Ministry of Foreign Affairs for apostille. Processing takes 3-5 business days. The apostille stamp is in Danish and references the 1961 Hague Convention in French.
Step-by-Step Registration Process
Step 1: Identify AD Bank and Prepare Application
Select an Authorised Dealer Category I bank in India that will submit the Form FNC application to the RBI on your behalf. Prepare all required documents with apostille from Denmark.
Step 2: Submit Form FNC to RBI via AD Bank
The AD bank submits Form FNC along with all supporting documents to the RBI. The application includes details of the Danish parent company, proposed activities, financial projections, and the branch office address in India. Timeline: 2-4 weeks for RBI processing.
Step 3: Receive RBI Approval Letter
Upon approval, the RBI issues a permission letter specifying the approved activities, conditions, and the validity period. The branch office must commence operations within the specified timeframe.
Step 4: Register with the Registrar of Companies
Within 30 days of establishing the branch office, file Form FC-1 with the Registrar of Companies (ROC). This registration is mandatory under Section 380 of the Companies Act, 2013, for all foreign companies establishing a place of business in India.
Step 5: Obtain PAN and TAN
Apply for a Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) from the Income Tax Department. These are required for all tax-related filings.
Step 6: Open Bank Account
Open a current account with an AD bank for receiving funds from the Danish parent and conducting business transactions in India.
Step 7: Register for GST (if applicable)
If the branch office will be providing services or conducting trade activities, GST registration is mandatory when turnover exceeds the prescribed threshold.
Timeline and Costs
| Stage | Duration | Estimated Cost |
|---|---|---|
| Document apostille in Denmark | 5-7 days | DKK 1,500-5,000 (INR 18,000-60,000) |
| Form FNC preparation and submission | 5-7 days | Professional fees: INR 30,000-50,000 |
| RBI approval processing | 2-4 weeks | No government fee |
| ROC registration (Form FC-1) | 7-15 days | INR 5,000-10,000 |
| PAN, TAN, and GST registration | 5-10 days | INR 2,000-5,000 |
| Bank account opening | 5-10 days | Varies by bank |
Total estimated timeline: 6-10 weeks from application submission to operational branch office.
Total estimated cost: INR 1,00,000-2,50,000 (approximately DKK 8,500-21,000) including government fees, professional fees, and documentation costs.
Post-Registration Compliance
Branch offices have specific compliance requirements that differ from those of Indian companies.
Annual Filings with ROC
- Form FC-3: Annual accounts of the branch office, filed within 60 days of the close of the financial year of the Danish parent.
- Form FC-4: Annual return of the foreign company, filed within 60 days from the last day of the financial year.
RBI Compliance
- Annual Activity Certificate (AAC): Issued by a Chartered Accountant certifying that the branch is operating within the scope of RBI-approved activities. Must be submitted annually to the AD bank for onward submission to the RBI.
- FLA Return: Annual Return on Foreign Liabilities and Assets, due by July 15.
Tax Compliance
- Corporate Tax Return: Due by October 31. Branch profits are taxed at 35% plus surcharge and cess.
- GST Returns: Monthly or quarterly as applicable.
- TDS Returns: Quarterly filing for all tax deducted at source.
- Transfer Pricing: If the branch transacts with the Danish parent or its affiliates, transfer pricing documentation is required.
Common Challenges for Danish Companies
Higher Tax Rate
The most significant disadvantage of a branch office is the 35% corporate tax rate on profits, compared to 25% for an Indian subsidiary company. Danish companies expecting substantial profits from Indian operations should consider whether a WOS structure would be more tax-efficient in the long term.
Activity Restrictions
Branch offices cannot engage in manufacturing, processing, or retail trading (except in SEZs). Danish companies in manufacturing sectors — such as Vestas (wind turbines) or Danfoss (engineering) — typically prefer the subsidiary structure for their Indian production facilities while maintaining branch offices for commercial representation.
RBI Approval Timeline
The RBI approval process can take 2-4 weeks and may involve queries or requests for additional documentation. Working with an experienced FDI advisory firm can streamline this process and reduce delays.
Profit Attribution Complexity
Computing profits attributable to the Indian branch office requires careful transfer pricing analysis and documentation. The branch must maintain separate books of account, and the profit attribution methodology must be consistent with the arm's length principle under the India-Denmark DTAA.
Conversion to Subsidiary
Many Danish companies start with a branch office and later convert to a subsidiary as operations scale. This conversion involves closing the branch office, incorporating a new company, and transferring assets and contracts — a process that can take 3-6 months and requires careful tax planning to minimise transition costs.
Frequently Asked Questions
Can a Danish branch office in India engage in manufacturing?
No. Branch offices cannot undertake manufacturing or processing activities in India, except within Special Economic Zones. Danish companies requiring manufacturing capability should consider a Wholly Owned Subsidiary or evaluate the subsidiary vs. branch office trade-offs.
What is the difference in tax rates between a branch office and a subsidiary?
A branch office is taxed at 35% plus surcharge and cess on its Indian profits, while an Indian subsidiary company is taxed at 25% (for turnover up to INR 400 crore). This 15-percentage-point difference makes the subsidiary structure more tax-efficient for profit-generating operations.
Can the branch office remit all profits to Denmark?
Yes, after paying all applicable taxes and obtaining a Chartered Accountant certificate. Profit remittance is done through the Authorised Dealer bank. Since the branch office is not a separate entity, the remittance is treated as an internal fund transfer and is not subject to additional withholding tax.
Is RBI approval required for all branch offices?
Yes. All foreign companies, including Danish companies, must obtain RBI approval through Form FNC before establishing a branch office in India. This is regardless of the sector or scale of operations.
How long is the RBI approval valid?
RBI approval for a branch office does not have a specific expiry date, unlike a liaison office which is typically granted for 3 years. However, the branch office must submit an Annual Activity Certificate confirming it operates within the scope of approved activities.
Can a branch office be converted to a subsidiary?
There is no direct conversion mechanism. The Danish company must close the branch office and separately incorporate a new Indian subsidiary, then transfer assets and contracts. This process typically takes 3-6 months and should be planned with professional tax and legal advice.