Registering to Do Business

Registration with the local government is often required before “doing business” in a country or engaging in certain activities. The definition of “doing business” can vary, but may include any one of the following:

• opening an office,
• buying or leasing real estate,
• employing staff,
• operating a long-term program directly (not through a partner organization), or
• opening a bank account.

If your project includes one or more of the listed activities and you don’t have a local partner, we can work with you and OGC to determine if registration is required. OGC may need to engage with legal counsel in the host country regarding the local legal structure.

We can also advise on whether Harvard or an affiliate is already registered in that country—which may lower the barrier to entry—if we can obtain an exemption from registration. An exemption may be possible for certain projects, such as those sponsored by the U.S. government or the host-country government. Such exemptions should be clearly defined in the terms of the award agreement.

“Permanent Establishment” (P.E.) is a special category of doing business. A corporation is said to have a P.E. if its activities cause it to be recognized as a corporate resident of the host country for tax purposes. P.E. is typically defined as a fixed and revenue-generating place of business in a foreign country, but this definition can vary based on tax treaties or tax codes. In general, the same criteria that trigger local registration (listed above) are also good guidelines for P.E.

Harvard generally strives for arrangements that will not result in the University having a P.E. in the host country.

If your activity requires a legal entity or registration in the host country, we can help you consider your options, develop your project plan and budget, and advise you on the review and approval process, which is handled by the University Committee on International Projects and Sites (UCIPS).

3 Options for Doing Business

Typically, Harvard has three options for doing business in a country, although not all options are available in all countries.

1. Register a new legal entity in the country. Depending on local requirements and needs, it may be a for-profit or non-profit entity. Setting up a non-profit entity, while generally the preferred choice, is often very difficult in other countries. All business would be transacted through the separate entity. Harvard Global’s office administration service may be an option for programs that require local registration.
2. Do not register, and instead partner with an existing organization in the country. The partner organization would then perform the activities that would otherwise necessitate Harvard's registration.
3. Do not register, and instead contract with local vendors to perform activities that would otherwise require registration; however, in some countries, merely outsourcing the work does not eliminate the requirement for Harvard to register.

Budget Considerations

Given the budget and typical duration of most overseas research projects, programs are strongly encouraged to work with local partners (option 2) or local vendors (option 3).

Incorporating a new entity (option 1) is expensive and resource-intensive. It should only be undertaken after consultation with us and OGC and when a long-term or more permanent solution is necessary in the host country.

We can assist in thoroughly reviewing your budget to account for registration costs and ongoing costs, including registration fees, local legal counsel, local accounting services, local payroll, insurance, local benefits, and taxes. Harvard Global incorporates many of these costs into their service fee for host-country implementation and ongoing administration.