A parent company refers to a company who owns over a certain proportion of stock in another company, or one that can exercise actual control over another company. A subsidiary company refers to a company that has a certain proportion of its stock owned by another company, or one that can be controlled by another company through negotiations. Parent and subsidiary companies are separate, independent institutions and can bear civil liabilities independently. Subsidiary companies are managed by parent companies on many levels and they can be similar to branch institutions of the parent company, but legally, subsidiary companies are independent companies with their own legal status, their own company names, and their own articles of association. They conduct business activities under their own names and their properties are independent from the properties of the parent companies.

Many multi-national companies operate in different countries through branch companies. The relationship between a branch company and its corporate head office may be similar to that of a subsidiary and its parent company, but a branch company and a subsidiary company have different legal status. A branch company is a branch under the corporate head office that conducts business activities. Branch companies do not qualify as institutions. They do not have independent legal status and they are not independently responsible for civil liabilities. The branch company does not have its own property, articles of association and operation, or decision-making business operation departments such as a board of directors. The name of the branch company must include the name of the head office and the words "branch company."

A representative office is an entity for foreign companies that wish to invest in Taiwan to begin preparatory operations. The representative office cannot conduct direct business operations, and can only conduct nonprofit activities such as information collection, market survey, advertisement and promotion, liaison, quotation, and price negotiation. It cannot conduct for-profit activities such as accepting any payment or purchase orders. The representative office can file expenses after its establishment but it cannot generate revenue, meaning that revenue in its NTD bank account is restricted to working capital wired from its head office. Employee salary and rent expenditures require withholding declarations. Even when there is no revenue, the representative office must still declare its annual income tax.