This report provides a general summary of the operating and financing life cycle of a Chinese subsidiary set up by a European Union (EU) small or medium-sized enterprise (SME). It considers, from the tax and regulatory perspectives, (i) how to finance/capitalise a foreign invested enterprise (FIE), (ii) how to extract profits or reinvest them, and (iii) the implications of winding down and liquidating operations. Details of the relevant laws and regulations are supplemented by observations on how FIEs of EU SMEs typically finance themselves and incur operational expenses in practice.
