Opening a Branch

Foreign legal entities are allowed to conduct trade activities under the same conditions and to the same extent as Czech entrepreneurs. They may become founders or cofounders of a company, or may join an existing Czech company. Foreign companies may operate in the Czech Republic, either by establishing a branch office registered in the Czech Republic or by establishing a Czech company. The following document provides useful information on the process of opening a branch in the Czech Republic.

Legal requirements

Organisational units

Subsidiaries

Notyfying a trade

Entry into the Commercial Register

Employing foreigners

Personalised help and advice

Legal texts

A branch office of a foreign company is not a Czech legal entity, but functions as the representative of a foreign company and incurs obligations on the foreign company`s behalf. Branch offices must fully list their business activities on their application for registration in the Commercial Register, as they are only allowed to engage in the business activities listed. The branch office must have an appointed director who is entitled to act on behalf of the foreign company as regards the branch office. He/she must be registered in the Commercial Register.

Legal requirements

The law under which the branch`s parent entity was founded also applies to the branch`s internal dealings. As of January 2002, there are no restrictions on acquisition of real estate by branch offices of foreign companies in the Czech Republic. Opening of branches is governed under rules set out in the Commercial Code, the Trade Licensing Act and the Act on International Private and Procedural Law.

Types of branches

The secondary right of establishment includes the right to set up in another Member State:

  • agencies and branches (without legal personality);
  • subsidiaries

Organisational units

Branches operating as organisational units are legally dependent entities, i.e. they do not have legal personality, although they have a certain "local" independence, an apparently independent management and their own accounts.

An organisational unit (a branch), as a standard legal person, enables a foreign company (the founder) to do business in the Czech Republic without having to establish a new company. It has the same rights and responsibilities as any Czech legal person with the exception of a simpler form of setup / dissolution and more advantageous tax arrangements.

The organisational unit of a company owned by a foreign person is an independently operating, separately–owned part of the company, which is locally separate from the foreign legal person.

Subsidiaries

A subsidiary is an independent legal entity that is in some way routinely managed by a (foreign) parent company. A subsidiary of a foreign parent company is, from a national law perspective, a company belonging to the state in which the subsidiary has its head office, which is subject to local laws regulating establishment and entry in the relevant Commercial Register.

Administrative procedures

Preliminary procedures

The procedure when setting up an organisational unit is as follows:

  • the founder (company) decides to set up the organisational unit,
  • an application is lodged with the relevant local trade licensing office,
  • an application is submitted for the entry in the Commercial Register.

The organisational unit is entered into the Czech Commercial Register and has a Czech identification number.

The organisational unit is created through the decision of the founder (company) and as a part of a foreign company it does neither have a founder`s deem, nor pays up basic capital or appoint an agent. The name of the organisational unit is the same as the name of the foreign company, with the suffix "Organisational Unit".

Notifying a trade

Information regarding notification of trades as well as applications for a licence of legal entities is available on the following websites :

Application for entry into the Commercial Register

Applications for entry in the Commercial Register may be submitted only on the mandatory form and must include an officially verified signature. These mandatory forms are available on the website of the Ministry of Justice of the Czech Republic with instructions on how to fill them in.

The time period for submitting an application for entry in the Commercial Register is no later than 90 days from the date of receiving confirmation of fulfilment of the conditions for operating a trade (an abstract from the Trade Register).

Employment of foreigners

Useful information, procedures and forms relating to employment issues for foreigners in the Czech Republic are available on the Integrated Portal of the Ministry of Labour and Social Affairs.

Other procedures, conditions and requirements

More information on general conditions for doing business and setting up businesses in the CR can be found on our portal in the following document.

Resources

The following governmental and non–governmental institutions and web portals offer further information and useful services related to establishment of a branch or a business.


Personalised help and advice

CzechTrade offers assistance service through its foreign offices.

The Enterprise Europe Network is an extensive network (with 600 host organisations and 4 000 full-time staff) providing information and advice to entrepreneurs through its local partners.

SOLVIT provides entrepreneurs with quick and practical help where they face problems doing business abroad as a result of incorrect application of EU market rules by public authorities.

Legal texts

Document created in co-operation between Your Europe - Business (EU portal for companies), CzechInvest Fact Sheet and BusinessInfo.cz.