A branch (organisational unit) is an establishment abroad that has no legal form of its own. All its acts are carried out on the basis of the foreign entity’s legal personality. The foreign branch keeps its own accounts.

Such a branch is run by a branch manager, who is entitled to represent the company in the country where the branch has its registered office.

In practice, this means that invoices will show an address in the Czech Republic, while all contracts will show the foreign address.

A branch of a foreign enterprise comes into existence as soon as it is entered in the Commercial Register.

 

Our branch set-up service includes the following services and steps:

1) full preparation of the documents needed to obtain the decision establishing the branch.

Processing of all the information and forms required to apply for a trade licence and for entry in the Commercial Register

2) preparation and completion of all documents required to obtain the trade licence, including mandatory annexes and certificates

3) preparation and processing of information for the registry court

4) full management of the trade licence notification process

5) notary fees

6) trade licensing office administrative fee

7) Commercial Register court fee

8) land registry administrative fee

9) representation before the authorities under a power of attorney

Is a Branch the Right Choice for Your Business?

When a foreign company wants to operate in Slovakia or the Czech Republic, it can either set up a separate subsidiary or register a branch, known locally as an organisational unit. Both options allow you to do business locally, but they differ in liability, administration and the way they are perceived by partners. Understanding the differences helps you choose the right structure.

Branch or Subsidiary?

A branch is not a separate legal entity. It acts on behalf of its foreign parent company, which remains fully responsible for its obligations. A subsidiary, by contrast, is an independent company with its own legal personality, and the parent’s liability is generally limited to its investment. A branch can be simpler to set up because no separate share capital is required, but the parent’s exposure to risk is greater.

When a Branch Makes Sense

  • When you want a local presence while keeping the business within the parent company
  • When you are testing a new market before committing to a subsidiary
  • When clients or partners prefer to contract with the parent directly
  • When the activities carried out locally are closely tied to the parent’s operations

Tax and Accounting

A branch usually has its own accounting obligations in the country where it is registered, and the profits attributable to it are typically taxed there. The parent company’s home country will also have rules about how branch profits are treated, and a double taxation treaty may determine which country has the right to tax them. It is therefore important to look at both sides before deciding.

The Head of the Branch

Every branch needs a head who is authorised to act on its behalf in the country concerned. Choosing the right person and clearly defining their powers is an important step, as they will deal with authorities and business partners.

If you are considering a branch in Slovakia or the Czech Republic, contact eTuls. We can explain the differences between the available structures and prepare everything needed for registration.