# Set up a hierarchy of subsidiary companies

Source: https://developer.avalara.com/vat-erp/configure-your-avatax-account/set-up-hierarchy-of-subsidiary-companies/

**Advice**:  
Setting up a hierarchy of companies is optional for VAT. You can still achieve correct VAT Reporting without setting up company hierarchies.

Does your platform support holding companies and subsidiary companies that share tax-collection information or file together? If so, make sure AvaTax reflects this relationship by designating [child companies](https://knowledge.avalara.com/bundle/dqa1657870670369_dqa1657870670369/page/Add_a_child_company.html) during company profile setup.

Company relationships within AvaTax are flexible. Hierarchies in AvaTax allow you to integrate multiple companies even if they’re running on different accounting, ecommerce, and ERP platforms. A child company can inherit the company profile of its parent company or it can have its own unique company profile.

Specifically for VAT, you can set up a company so that the representative company and the subsidiary companies are part of a single VAT group. In this case, the representative company reports VAT for all of their subsidiary companies under a single VAT number.

Not all countries have VAT groups. In addition, a subsidiary can be part of a VAT group in Germany and have a German VAT number. But it can also have a VAT number in Portugal and have no relation to its parent company.