Subsidiary vs. Branch in Czech Republic
Subsidiary vs. Branch in Czech RepublicUpdated on Sunday 26th January 2020
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Czech Republic offers several legal entities that can be chosen for incorporation by foreign investors. At the same time, foreing companies may also set up a subsidiary or a branch office, which can provide certain advantages, depending on the business strategy of the parent company. There are different requirements for the registration of a branch or a subsidiary and our team of lawyers in Czech Republic can offer assistance and legal advice on the incorporation aspects.
Subsidiary in Czech Republic
One of the ways to start a business in Czech Republic is by opening a subsidiary that will be registered following the regulations applicable under the Czech Commercial Code and it will be treated as a resident company in the Czech Republic. The main characteristic of a subsidiary refers to the fact that it is considered a separate legal entity than the parent company, which means that the legal entity set up in this country will have the right to perfom business operations independent from the business strategies set up by the parent company. The subsidiary will require a minimum share capital of CZK 200,000 and it will be registered following the legal procedures applicable in this jurisdiction. The company’s founders will have to notarize the company’s statutory documents in front of a public notary and register for taxation purposes in this country.
Although the company will be formed following the regulations applicable for commercial companies in Czech Republic, the investors will need to provide a resolution of the parent company, stating the decision to establish a subsidiary here. Our team of Czech lawyers can provide further details on other registration steps. They can also help you register your company for VAT.
Branch office in Czech Republic
A branch office in Czech Republic is not considered a different legal entity and thus, its business activities will have to be approved by the parent company. Also, it is important to know that the branch is required to state its business activities at the Commercial Register. When opening a branch in Czech Republic, the investors will need to comply with the regulations provided by the following acts:
- Civil Code;
- Trade Licensing Act;
- The Act on Commercial Code of Legal Entities and Natural Entities;
- The Act on Private International Law.
Our law firm in Czech Republic can offer more details on the regulations referring to branches and subsidiaries registered here. Please contact our attorneys for assistance.