Open Company Branch or Subsidiary in the Czech Republic

Registering a Czech Branch

Foreign entrepreneurs may incorporate businesses in the Czech Republic in many ways. Establishing a company, usually limited liability company, may represent the best suited solution for someone who wishes to set up a brand new company. However already established companies may choose to incorporate a subsidiary or a branch in the Czech Republic. A company branch is a business entity which represents the foreign parent company on the territory of the Czech Republic. A branch is not an independent legal entity, and doesn't have any obligations nor rights which are all assumed by the parent company.

Prior to registering there are several steps that a company branch must go through. A branch of a foreign company must have the same name as the parent company and appoint a resident person or company to represent it. Also the documents of incorporation must be notarized and a bank account should be opened in order to obtain a certificate for the deposited capital. The last step before registering the branch represents translating the registration certificate of the parent company and the articles of association of the parent company.

A company branch in the Czech Republic must be registered with the Office of Registration of Companies in the same manner as an ordinary company. However there are additional documentation that need to be presented along with the registration application. It must contain a proof of existence of the foreign parent company, certified copies of the Articles or Statutes, directors' names, share capital, registered office, and the names of the representatives. The registration process is quite rapid and in case of acceptance the Commercial Register issues the registration certificate, or requests additional information.

As any other company, a branch in the Czech Republic must be registered for tax purposes. In a maximum period of time of 30 days the branch must register for income tax. Also within 15 days the company must enroll for withholding and payroll tax registration. The last procedure implies VAT registration. It should be done in 15 days after all the conditions are met. After the submission for income the company branch is issued the tax identification number. After registering with Tax Authorities the Czech company branch must register employees for social security and health insurance.

Establishing a company branch in the Czech Republic may as well be done from abroad, through power of attorney. There is no need for residency in the Czech Republic for the managers. However a representative of the company must be appointed to personally carry on the administrative procedures of company registration.
Usually the process of company branch incorporation in the Czech Republic requires a short time period. Most of the procedures, as preparing the articles of association of the new Czech company branch and notarizing the required documents are completed in one day.  Registering with the Commercial Register may take up to one week. Setting up a company branch in The Czech Republic usually takes approximately two weeks.

Setting up a subsidiary in Czech Republic

Unlike a branch company, a subsidiary has the same status as any regular Limited Liability Company and has its own share capital, having the foreign parent company as sole or main shareholder. A Czech limited liability company can be set up as a subsidiary by a legal or individual entity or an association of a group of individuals or entities up to 50 members. In any of the cases, the memorandum has to be a notarized deed.
The share capital required by a Czech limited liability company is at least CZK 200,000. In case of non-monetary contributions, they must be clearly and fully settled before the company is registered in the Commercial Register. The non-monetary contributions are evaluated by an expert appointed by the Court. Prior to the registration application, a minimum of 30% of the monetary contribution must be paid up. In case of a company with a sole proprietor, the entire amount of the share capital must be paid up from the beginning, before the registration process.

Setting up a Czech limited liability company requires a license from the Trade License Office. To obtain it, the necessary documents are the memorandum of association of the parent company for companies not yet registered, or an excerpt from the Register for the already established companies, papers of the office space and an administrative fee.

The license gives the Czech subsidiary a term of 90 days to apply to the Commercial Register. In up to 5 working days the company is registered and eligible for the corporate income tax of 19%, in some cases 5%. The first day of work of the first employee is the term when the company must register for health insurance and social security taxes.