Localization for a small subsidiary: a decision tree and the minimum obligation list
A small subsidiary, perhaps a sales office with two people, does not need the same localization program as a large plant. It still has to meet every obligation that applies to it. The usual choice is between three set-ups: run the entity in the group ERP with its local features, let a local accountant keep the books in a local system, or combine the two. The right answer depends on a few questions you can answer early.
Part 2 of 3 in the series Sizing and moving. Read this first: Estimate localization effort per country and ERP from the evidence. Next: Migrate localization from one ERP to another without losing compliance.
This guide gives a decision tree, the minimum list of obligations to check for any new entity, and a sample case. It is a starting point for a conversation with your local accountant and tax adviser, not a substitute for it.
Decision tree
Work through the questions in order. Stop at the first answer that settles it.
- Does the country require structured e-invoicing, real-time reporting or a periodic audit file that your group ERP does not support with verified evidence? Check the country page's e-invoicing matrix, VAT reporting and SAF-T rows.
- Yes → either budget to close the gap in the group ERP (see estimate localization effort) or use a local system or accountant for issuing and filing. Go to 4. - No → go to 2.
- Will the entity issue more than a handful of sales invoices a month, hold stock, or run local purchasing?
- Yes → run the entity in the group ERP with its localization. Go to 4. - No → go to 3.
- Is there a local GAAP book or statutory chart of accounts that the group ERP cannot produce?
- Yes → a local accountant keeps the statutory books; the group ERP holds a management ledger. See operate a local ledger beside the group ERP. - No → the group ERP with an outsourced local accountant who files from its reports.
- Who files? In every set-up, name who prepares, who approves and who submits each return. A local accountant can file; the group still owns the result.
Revisit the tree when the entity grows, or when the country introduces a new mandate.
Minimum obligation list
Every new entity should have an answer, with a source, for each of these. Most of the items link to a section of the country page.
| Area | Question | Where to check |
|---|---|---|
| Company and tax registration | Which registrations, and with whom? | Authority; company VAT registration |
| VAT or GST | Registration threshold, return frequency, deadline | Country page, key facts and VAT reporting rows |
| E-invoicing | Is it mandatory for the entity's customers and suppliers? From when? | Country page, e-invoicing section |
| Audit file | Periodic or on request? | Country page, SAF-T rows |
| Statutory accounts | Local GAAP, chart of accounts, filing of annual accounts | Local accountant; key facts where recorded |
| Payroll | Employer registrations and filings, if anyone is employed locally | Domestic payroll localization |
| Banking | Local account, payment formats | Local banking and payment formats |
| Withholding | On payments made or received | Withholding tax |
| Record keeping | Where records are kept, for how long, in what form | Authority; local accountant |
| Intercompany | Recharges and transfer pricing documentation | Intercompany and transfer pricing |
Mark each answer as confirmed (with source and date) or open. Do not go live with open items in the first four rows.
Sample case
A software company opens a two-person sales office in another EU country. The office sells subscriptions to local businesses, about twenty invoices a month, and has no stock.
- Question 1: the country page shows a structured e-invoicing requirement for domestic B2B invoices. The group ERP has verified native support in that country's matrix. → No gap. Go to 2.
- Question 2: twenty invoices a month, no stock, no local purchasing beyond rent and travel. → Go to 3.
- Question 3: the country has a standard chart of accounts, which the group ERP can map. → The group ERP, with a local accountant who prepares and files the VAT return and annual accounts from the ERP's reports.
- Question 4: the local accountant prepares and submits the VAT return; the group controller approves it before submission.
The company completes the minimum obligation list, finds that payroll needs two registrations, and adds the payroll provider's journal to the monthly close. The whole set-up is sized as band S in the effort method.
Worksheet
Use the small subsidiary decision and obligation checklist.
Worksheet: Small subsidiary decision and obligation checklist
Copy this worksheet for each case. It records decisions and evidence; it does not determine the tax or legal treatment.
Show the worksheet
Use with the small subsidiary guide.
Decision tree
| Question | Answer | Evidence (country page row or source) |
|---|---|---|
| 1. Mandate the group ERP does not support with verified evidence? | ||
| 2. More than a handful of invoices, stock or local purchasing? | ||
| 3. Local GAAP book or chart the group ERP cannot produce? | ||
| 4. Who prepares, approves and submits each return? | ||
| Resulting set-up |
Minimum obligations
| Area | Answer | Source and date | Confirmed or open | Owner |
|---|---|---|---|---|
| Company and tax registration | ||||
| VAT or GST | ||||
| E-invoicing | ||||
| Audit file | ||||
| Statutory accounts | ||||
| Payroll | ||||
| Banking | ||||
| Withholding | ||||
| Record keeping | ||||
| Intercompany |
- ☐ No open items in the first four rows before go-live
- Review again on (date or trigger):
Sources checked: 27 October 2026. The guide points to country data on this site and makes no country-specific claims of its own.
Related guides and data
Part 2 of 3 in the series Sizing and moving. Read this first: Estimate localization effort per country and ERP from the evidence. Next: Migrate localization from one ERP to another without losing compliance.
- Choose a local ERP, a local ledger or a global localization
- Operate a local ledger alongside a group ERP
- Estimate localization effort per country and ERP from the evidence
- How to map invoices, tax returns, audit files and statutory accounts
Data on this site: Country pages with sourced key facts · E-invoicing country × ERP matrix · VAT reporting requirements by country
In Planning and rollout: previous Migrate localization from one ERP to another without losing compliance · Guides by task · All guides
Vendor documentation is cited only as an example of the level of evidence to ask for; it is not a recommendation or a ranking. This guide is general information, not tax or legal advice. Checked 2026-10-27.
Related: Glossary – abbreviations and terms used in these guides (SAF-T, Peppol, CTC, EN 16931, IFRS and more).
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