Subsidiaries are companies with legal personality and freedom in administration, opened by foreign companies in the Czech Republic.
The operation of this type of business is based on the trade license received from the Trade Licenses Office.
There are many forms a subsidiary may take in the Czech Republic, but the most popular one is the limited liability company.
A limited liability company opened by a foreign company in the Czech Republic must be established by at least one shareholder but not more than 50. There is a minimum share capital requested at registration of at least 1 CZK.
More details on the Czech subsidiary are available in the video below:
The foreign company must issue the decision of opening the subsidiary in the Czech Republic and accompany it with the articles of association and a list of the shareholders and their contribution.
The above documents must be notarized.
A bank account must be opened and the Czech subsidiary must deposit the minimum share capital. The bank will issue a certificate of deposit, necessary in the future transactions.
The next step is registering at the Trade Licensing Office and receiving the trade license. This trade license is used, along with the foundation deeds and the certificate of deposit, at registration in the Business Commercial Registry of the Regional Commercial Court.
Like any other ordinary company, the subsidiary established in the Czech Republic must pay the same taxes as a limited liability company, so it’s important to register with the tax authorities and apply for a VAT number. This procedure is made in the same time with the registration for the social security and for the health insurance.
The registration process of a subsidiary in the Czech Republic takes about 20 days and, only after this process, the company may begin the commercial activities.
The subsidiaries opened in the Czech Republic receive the same treatments as the local companies, but due to the different treaties signed with other countries, the taxation may differ.
For example, Czech Republic has signed treaties of double taxation avoidance with more than 80 countries. These treaties assure the single taxation of a foreign company in the country of origin or the refund of the paid taxes. The withholding tax on dividends, interests and royalties paid by the subsidiary to the foreign company may be lowered or even abolished in some cases if the double tax treaties provide so.
This is the main reason why so many foreign companies choose to open subsidiaries in the Czech Republic.
You may contact our specialists in company formation in Czech Republic if you need to open a subsidiary or other type of company in this country.