HSBC-subsidiary-geneva
Financial services is the most active sector among UK multinational companies establishing subsidiaries, such as HSBC’s office in Geneva. (Photo by Harold Cunningham/Getty Images)

Setting up a subsidiary can allow a company to spread risk, expand its business and operate closer to its markets, but do UK-based multinational companies (MNCs) favour locations closer to home when it comes to setting up subsidiaries, or do they go further afield?

As part of the Monitor Network’s multinational companies database, we analysed 2,190 of the top MNCs by revenue to establish how many subsidiaries they have and where they are located. Of these top companies, 8.6% are headquartered in the UK. These 188 companies have set up 22,464 subsidiaries globally. While the number of subsidiaries and spread is not even per company, this would average at 190 subsidiaries per company.

Where are UK MNCs subsidiaries located?

UK companies have set up 9,153 domestic subsidiaries (41% of the total) and 13,311 overseas subsidiaries (59%). This mirrors a similar trend for the top 2,190 MNCs globally, which created 46% domestic subsidiaries and 54% overseas.


The US is the leading foreign destination for UK MNC subsidiaries, with 2,800 subsidiaries established by the top UK MNCs, 12.5% of the total number. Following the UK’s departure from the EU, the country is trying to strike a trade deal with the US, although the EU, where more subsidiaries are located, may be a better focus.

The top UK MNCs have located one-fifth (20.4%) of their subsidiaries in EU countries. This highlights the importance of the EU to UK companies. France is the leading EU destination for UK-based MNCs to establish a subsidiary, with 670 subsidiaries located in the country.

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Of the 4,586 subsidiaries located in the EU by the top UK MNCs, 1,367 have been established by financial services companies. With the sector still waiting to discover the details of the Brexit deal, these figures show just how important the EU market is to UK-based financial services firms.

UK MNCs drawn to larger economies

UK companies tend to create more subsidiaries in larger economies. There is a statistically significant correlation between a country’s GDP and the number of subsidiaries UK MNCs set up in that country.

The US has the largest GDP ($22.2trn) and highest number of subsidiaries created by the top UK companies overseas (2,800).

China and Japan are outliers based on them having higher GDPs but a lower number of subsidiaries established by UK-based MNCs. These countries have a high number of barriers for foreign companies setting up subsidiaries, and this is likely to have acted as a deterrent.

France, Ireland and the Netherlands all have lower GDPs but higher numbers of UK MNC subsidiaries. Given their close proximity to the UK and the manner in which their  key sectors match up, these pull factors are likely to attract British companies to set up subsidiaries.

How ‘tax havens’ attract British subsidiaries

The top UK MNCs have located 5.2% of subsidiaries in low-tax jurisdictions often classed as tax havens. Of the 1,173 subsidiaries located in such locations, 439 are in Jersey in the Channel Islands, which lie off the southern coast of England. Jersey offers a 0% corporate tax rate, with exceptions for financial services, utilities and large retail companies.

The UK MNCs also favour Hong Kong to establish subsidiaries, with 311 set up in the country. Hong Kong offers attractive tax conditions, with the tax rate for the first $2m of assessable profits lowered to 8.25% for corporations and 7.5% for unincorporated businesses rates. Assessable profits above $2m are subject to a tax rate of 16.5% for corporations and 15% for unincorporated corporations. The Heritage Foundation ranked Hong Kong as the second-freest economy in the world in 2020 and its access to mainland China also provides benefits.

Some 53.9% of the UK subsidiaries headquartered in a tax haven have been established by financial services companies. Of these, 66% are based in either Jersey or Hong Kong.

Financial services most popular sector for UK MNC subsidiaries

Out of the 188 UK MNCs surveyed, 27 are in the financial services sectors. These 27 companies have established 5,823 subsidiaries, accounting for one-quarter of all subsidiaries established by the leading UK MNC companies. The top five sectors account for 57% of subsidiaries set up by UK MNCs.

Residential building company Persimmon was the top UK-based MNC for subsidiaries, with 810. The top ten UK-based MNCs have set up one-quarter of the 22,464 subsidiaries established by the top UK MNCs.

Now that the UK has left the EU, the landscape of subsidiaries may begin to change. While the EU already accounts for one-fifth of subsidiaries established by the top UK MNCs, UK companies may need to expand on this to retain access to the Single Market, which previously would have been available to the company’s UK operations. With financial services the top sector for the largest UK companies, the outcome of the trade deal regarding the sector, which has yet to be finalised, will be scrutinised by all UK-based MNCs with regards to their future subsidiary plans.

For further research, check out our interactive global MNC subsidiary mapping tool, which is searchable by company, sector, source country and host country.