Branch or subsidiary is usually asked when a company wants to employ someone abroad. It is a tax and liability question with an employment answer attached, and for one or two people the honest answer is often neither.
A branch is the same company, a subsidiary is a new one
A branch is an extension of the parent operating in another country, so the parent is directly exposed to its obligations and liabilities. A subsidiary is a separate legal entity with its own governance and, ordinarily, liability confined to it. That distinction drives most of the practical differences that follow, including what a customer or a regulator can reach.
Registration, filing and closure differ in effort
Both require registration, local filings and usually local accounting. A subsidiary typically carries more formality at setup and ongoing governance; a branch can pull the parent's own accounts into local filing requirements, which some parents find unwelcome. Closure is the part nobody asks about and is frequently slower and more expensive than incorporation.
Either way you become a local employer
Once the entity exists you hold local employment obligations directly: contracts under local law, payroll registration, statutory benefits, notice and severance rules, and the local filing calendar. That is the operational cost that continues after the setup advice has been paid for, and it is the part that usually decides whether it was worth it.
For one or two people, an EOR is the comparison
Setting up an entity to employ one person is rarely proportionate, which is why the branch versus subsidiary question so often ends with neither. The comparison worth running is entity cost and time against employer of record fees over two or three years, with a view on whether headcount in that country is actually going to grow.
Questions people ask about branch vs subsidiary
Which is faster to set up?
It varies by country. Neither is quick enough to solve an urgent hire, which is the usual reason employers look at an EOR first.
Does a branch create a taxable presence?
Generally yes, and that is often the point of the question. It is advice to take locally rather than a rule to apply from a page.
When is a subsidiary clearly right?
When headcount, contracts or regulation in that country justify a permanent local presence rather than one or two employees.