Growing Your Business Internationally: Key Considerations for Expanding Your Operations

This Knowledge Hub resource is a contribution from Osborne Clarke, providing an overview of the key legal and operational considerations when expanding a business into new international markets. 

International expansion presents significant growth opportunities, but it also introduces new regulatory, structural and operational complexities. Establishing operations in another jurisdiction requires careful planning across multiple areas, from corporate structure and employment arrangements to tax, intellectual property and compliance. 

This article outlines the core areas founders and operators should consider when growing internationally, including business structure, employment and people issues, tax and accounting, commercial contracts, intellectual property, compliance and governance, and premises considerations. The aim is to provide a structured overview of the principal issues that typically arise as a business establishes and begins trading in a new market. 

Business Structure 

One of the earliest decisions when entering a new jurisdiction is how to structure the local presence. Two primary options are typically considered: establishing a branch or incorporating a subsidiary. 

A branch operates as an extension of the existing company, without creating a separate legal entity. This can offer simplicity in certain circumstances, but it may expose the parent company more directly to liabilities in the new market. 

A subsidiary, by contrast, is a separate legal entity incorporated in the target jurisdiction. This structure can provide clearer separation of liabilities and may offer advantages in terms of local credibility, governance and operational autonomy. 

The choice between branch and subsidiary affects tax treatment, governance obligations, reporting requirements and overall risk exposure. Formation considerations should therefore be assessed carefully at the outset of expansion. 

Employment & People 

Hiring and managing people in a new country brings a range of legal and operational obligations. Decisions around workforce structure typically include whether to engage individuals as employees, consultants or contractors. 

Employment Contracts and Documentation 

Employment contracts must be localised to comply with domestic employment law. This may include mandatory terms, statutory rights and notice provisions. Additional documentation such as staff handbooks may also need to be adapted to reflect local legal requirements and workplace practices. 

Pensions and other benefits may be subject to local rules, and these must be factored into overall employment cost planning. 

Payroll and Deemed Employment 

Operating payroll in a new jurisdiction requires compliance with local payroll regulations and tax withholding obligations. There is also risk in misclassifying individuals as contractors where they may be deemed employees under local law. Deemed employment can lead to unexpected liabilities, including back taxes, social security contributions and employment rights claims. 

Stock Options and Ownership of IP 

Stock option arrangements often require localisation to ensure compliance with local securities and tax rules. This is particularly important for high-growth businesses that rely on equity incentives. 

Employment and contractor arrangements should also address ownership of intellectual property clearly. In some jurisdictions, intellectual property created by employees or contractors may not automatically vest in the company without appropriate contractual provisions. 

Immigration and Global Mobility 

Where talent is relocated across borders, immigration considerations and work authorisation requirements must be addressed. Global mobility planning is essential to ensure individuals can lawfully work in the new market. 

Works Councils 

In certain jurisdictions, employee representation structures such as works councils may apply. These bodies can have consultation or co-determination rights, particularly in relation to workforce restructuring or significant operational changes. 

Tax & Accounting 

Tax and accounting considerations arise both at the point of market entry and once trading commences. 

Tax Registration 

Businesses may need to register for corporate tax, payroll taxes or other local tax regimes upon establishing operations. Understanding when registration is triggered is critical to avoid compliance risks. 

Payroll Taxes 

Operating payroll locally typically involves employer and employee tax obligations. Accurate withholding and reporting processes must be implemented from the outset. 

Accounting Requirements 

Local accounting rules may differ from those in the home jurisdiction. Businesses may need to maintain local books and comply with statutory reporting obligations. 

Cost-Plus Considerations 

Where services are provided between group entities across jurisdictions, transfer pricing and cost-plus arrangements may need to be considered to ensure appropriate allocation of costs and revenues. 

Contracts & Commercial Framework 

Expanding internationally requires careful review and adaptation of commercial documentation. 

Localisation of Terms 

Contracts, including online terms, should be localised to reflect domestic legal requirements. This may include mandatory provisions under consumer protection law or other regulatory frameworks. 

Privacy and Data Protection 

Privacy and data protection rules vary across jurisdictions. Businesses operating online or handling personal data must ensure their terms and operational practices comply with local requirements. 

Consumer Protection and Marketing 

Consumer protection rules can impact how products and services are offered and marketed. Marketing and promotional activities may be subject to specific restrictions or disclosure obligations. 

Distribution and Agency 

Where businesses use local distributors or agents, specific rules may apply. Commercial agents rules can affect termination rights and compensation obligations. 

Anti-Trust 

Competition or anti-trust laws must be considered when structuring distribution arrangements, pricing strategies or market conduct. 

Dispute Resolution 

Cross-border contracts should address dispute resolution mechanisms, including governing law and jurisdiction, to provide clarity in the event of disputes. 

Intellectual Property 

Protecting intellectual property is a critical component of international expansion. 

Trademarks and Patents 

Businesses should assess whether existing trademark or patent protection extends to the new jurisdiction. Additional filings may be required to secure local protection. 

EU-Wide Protection 

Where operating within the European Union, EU-wide protection mechanisms may be available, subject to eligibility and registration requirements. 

Infringement Issues 

Entering a new market may expose the business to infringement risks, both in terms of protecting its own rights and ensuring it does not infringe third-party rights. Conducting appropriate clearance checks can reduce this risk. 

Compliance & Governance 

Operating in a new jurisdiction brings additional compliance and governance responsibilities. 

Registered Office 

A registered office may be required for incorporated entities. This can have implications for corporate filings and official correspondence. 

Director Duties 

Directors of local entities may be subject to specific statutory duties under local law. These duties can differ from those in the home jurisdiction and should be clearly understood. 

Regulatory Compliance 

Depending on the sector and business model, regulatory approvals or licences may be required before commencing operations. Ongoing compliance obligations must also be monitored and maintained. 

Premises 

Physical presence in a new market can take different forms. 

Work from Home 

Remote working arrangements may reduce initial overheads but can still trigger local employment and tax considerations. 

Serviced Office 

A serviced office can provide flexibility and speed to market, particularly during early-stage expansion. 

Leased Office 

Entering into a commercial lease introduces longer-term commitments and contractual obligations. The terms of occupation should be carefully reviewed in light of local property law and commercial practice. 

Conclusion 

International expansion involves more than establishing a presence in a new jurisdiction. It requires coordinated planning across corporate structure, employment, tax, commercial contracts, intellectual property and governance. 

Addressing these considerations in a structured way can reduce risk, support compliance and create a stable foundation for sustainable growth in international markets. 

The full presentation, Growing your business internationally – Key considerations for expanding your operations, is available for download for those seeking a more detailed overview of the topics outlined above.