Holding Structures, Foundations, and Trust Funds in the Czech Republic for Slovak Nationals

Holdings, foundations and trust funds are available in the Czech Republic to Slovak citizens as well, but they require meeting specific legal and administrative conditions—most commonly registration with the relevant authorities and compliance with tax obligations. A Slovak citizen may be a person with decisive influence in these structures, but must comply with the Czech legal system and related regulations. Tax and social security obligations are governed by Czech law; an incorrectly set up structure may lead to additional tax assessments and penalties. The cross-border element further complicates the structure; without expert advice, there is a risk of double taxation.

Holdings in the Czech Republic – legal framework and practical aspects

A holding is a structure that uses a legal entity (most commonly a joint-stock company or a limited liability company) that owns interests or shares in other companies. In practice, it is an arrangement used by entrepreneurs and investors for the centralized management of multiple businesses or projects.

the Business Corporations Act No. 90/2012 Coll., as amended and effective in 2026, is not explicitly limited to Czech citizens. A Slovak citizen may therefore establish a holding company in the Czech Republic, participate in its management, or own it. There is no direct obstacle.

What is often overlooked in practice: a holding is a formal structure that entails specific legal obligations. When setting up the ownership and management structure of a holding, it is usually worth going through the key steps with experts in corporate law, holdings and structures.

• Registration obligations : The company must be entered in . A Slovak citizen acting as a founder or a member of the statutory body must be identified under Czech legal regulations (, in some cases registration of the individual for personal income tax is required).
• Administrative and accounting obligations : The holding must keep  (Act No. 563/1991 Coll., on Accounting, as amended and effective in 2026), file  with the Czech tax authority, and comply with employees’ social security and health insurance obligations.
• Tax specifics : If the holding owns shares or ownership interests in Czech companies, it incurs obligations relating to . Profit shares (dividends) that the holding itself pays out or distributes to shareholders are governed by Czech tax law. If the shareholder is an individual resident in Slovakia, the standard personal income tax rate applies (typically ).  for a holding company in the Czech Republic is 21% as of 2026.

What often goes wrong: Typical mistakes

1. Incorrect determination of the place of effective management : The holding must have its place of effective management in the Czech Republic. If all decisions are made from Slovakia, there is a risk that the Czech tax authorities could challenge the holding’s place of effective management and assess it as a foreign legal entity, which would affect tax residency and taxation.
2. Failure to register for tax : The holding must register with the relevant  for corporate income tax and, where applicable, for VAT. Without registration, it cannot properly issue invoices, cannot claim input VAT, and it faces , which may reach up to CZK 500,000.
3. Incorrect setup of the ownership structure : If a Slovak entrepreneur does not properly formalize their entry as a shareholder/partner (unsigned , shareholders’ agreements, articles of association), uncertainties arise regarding ownership, which may lead to legal disputes or blocking the payment of profit shares.

When does a holding make sense for a Slovak citizen?

• They want to own multiple Czech companies under one “umbrella” for centralized management.
• They plan to reinvest profits into development in the Czech Republic and want to prepare this option formally.
• They structure tax obligations to minimize the burden in compliance with the law.
• They are preparing to sell a group of businesses and the holding serves as the selling entity. In such a situation, it makes sense to address the transaction structure and contractual documentation within company sales and transaction advisory.

Foundations in the Czech Republic for Slovak citizens

A foundation is an institution established for the purpose of providing long-term and stable support for a defined meaningful activity in the public interest (e.g., education, healthcare, social services, environmental protection).

Act No. 227/1997 Coll., on Foundations and Foundation Funds, as amended and effective in 2026, governs their establishment and operation. Key information for a Slovak citizen: a founder of a foundation in the Czech Republic may be a natural or legal person without any restriction based on nationality.

A Slovak citizen may therefore establish a foundation in the Czech Republic. However, they must:

• Draw up , by which the foundation is established.
• Donate initial assets to the foundation in the minimum amount of .
• Ensure registration of the foundation in the  maintained by the registry court.
• Comply with obligations relating to asset management, transparency and reporting.

Specifics for foreign founders

1. Identification of the founder : A Slovak citizen must be identified under Czech rules. If they do not have permanent residence in the Czech Republic, they must provide .
2. Source documentation : If assets are transferred to the foundation from Slovakia (e.g., funds from a Slovak bank account), it is necessary to verify their origin and ensure compliance with  and tax obligations.
3. Tax status : A foundation in the Czech Republic is subject to corporate income tax; however, its income from its main public-benefit activity, income from received gifts, inheritances and certain other income (e.g., from rent, interest) are . The founder must not forget their personal tax obligations if they were to receive income from the foundation.

Practical risk – incorrect legal status of the foundation

The most common mistake: a foreign founder believes that a foundation is “automatically” a non-profit organization with all the benefits. The reality is more complex. A foundation must:

• Actively and genuinely carry out the supported public-benefit activity (this is not merely holding assets).
• Publish annually  about its activities and financial management.
• Be subject to .
• Maintain transparent accounting.

If a foundation becomes a “zombie” structure (with no real activity, serving only as a vehicle to hide assets), it risks deregistration and administrative complications, including potential taxation of income that would otherwise be exempt.

When is a foundation suitable?

• It wants to provide long-term support for a specific public-benefit purpose (e.g., scholarships for students, support for medical research).
• It wants a structure that, from a tax perspective, allows tax relief under certain conditions.
• It wants to dedicate assets to a public-benefit purpose but does not want to do so personally.
• It is planning philanthropy across borders and wants to have a stable legal entity.

Trust funds in the Czech Republic

A trust fund (trust) is an institute introduced into the Czech legal system by the Civil Code (Act No. 89/2012 Coll., the Civil Code, as amended and effective as of 2026). It is a pool of assets without legal personality, separated from the founder’s assets and entrusted to a trustee to achieve a specific purpose.

A trust fund primarily serves for the long-term administration and protection of assets for the benefit of certain persons (beneficiaries) or to achieve a specific purpose. It is suitable for:

• Protecting family assets from creditors or in the event of divorce.
• Transferring assets to minor children without direct ownership.
• Structuring inheritance.
• Private investment strategies and asset holding.

Legal structure and a Slovak citizen

The founder (settlor) of a trust fund may be any entity, including a foreign one. A Slovak citizen can therefore establish a trust fund in the Czech Republic. The fund is then administered according to the purpose determined by the founder in the deed of foundation.

Key roles in this arrangement:

• Founder (settlor): Creates the fund, contributes assets to it, and determines its purpose and beneficiaries. This can be a Slovak citizen.
• Trustee (trustee): A natural or legal person who administers the fund in accordance with its deed of foundation and legal regulations. The trustee is responsible for managing the fund’s assets.
• Beneficiaries : Persons for whose benefit the fund is established – they may also be in Slovakia.

Tax and legal specifics

1. Tax status : A trust fund has no legal personality, but it is considered a corporate income tax payer (), in respect of income it retains and does not distribute to beneficiaries. As of 2026, the trust fund’s income tax rate is 21%. If the fund distributes income to beneficiaries, that income is taxed at the level of the beneficiaries.
2. Beneficiaries’ income : If the beneficiaries are natural persons in Slovakia, Slovak tax obligations may arise for them (under international tax law and ).
3. Registration : A trust fund is entered in  (formerly the Register of Trust Funds), which forms part of the public registers maintained by the registry courts.

Practical risk – complexity of the structure

A trust fund is a legal institute that has been used in the Czech Republic for a relatively short time, although its legal regulation has already been refined several times. The most common issues:

• Unclear tax qualification in the past : Although the current tax treatment of trust funds is relatively clear, correct application in practice requires expert knowledge. Incorrect interpretation may lead to additional tax assessments and penalties.
• Incorrect setup of beneficiaries and their rights : If  are not clearly defined (who they are, how and when they are to draw benefits from the fund), legal disputes or invalidity of documents may arise.
• Lack of transparent accounting : . If it is missing or kept inadequately, there is a risk of a fine and administrative proceedings.
• Foreigner as founder – administrative barriers : For Czech authorities to recognize a trust fund established by a foreign person as valid, all documents must be properly certified and translated.

Specifics for Slovak citizens – cross-border aspects

When a Slovak entrepreneur or investor decides, in relation to the Czech Republic, to work with holdings, foundations or trust funds, an international element is added to the mix, which significantly complicates the legal, tax and social-law situation.

Double taxation

The most common problem: a Slovak citizen or company owns assets in the Czech Republic (through a holding company or a foundation/trust fund). The assets generate income. The question arises – who will tax this income and where?

In theory, there is a Treaty between the Czech Republic and the Slovak Republic for the Avoidance of Double Taxation (published under No. 100/2003 Coll. Int. Treaties, as amended and effective as of 2026). This treaty should clearly determine which country has the right to levy the tax.

In practice, however, it is often difficult to resolve—especially if:

• Income is generated by activities in several states at the same time.
• A holding company forwards profit distributions to Slovakia, and the Slovak authorities believe they should tax them as well.
• A foundation or trust fund has cross-border activities or beneficiaries.

Without expert advice, there is a risk that you will pay tax twice—first in the Czech Republic and then again in Slovakia.

Social security links and insurance obligations

If a Slovak citizen is a director or a member of the statutory body of a Czech company (a holding company or a trustee of a trust fund) or a member of a foundation’s bodies, the following may arise:

• Social security contributions: If this is genuinely a managerial activity and not merely a formal role, it may fall under the Czech social security system depending on the nature of the office and the person’s place of residence.
• Health insurance: Similar to social security, depending on the nature of the office and other circumstances.
• Income tax: Remuneration for holding office in Czech corporate bodies is subject to Czech income tax. In Slovakia, it may be treated as worldwide income, which would require applying the Double Taxation Treaty.

Without proper legal and tax structuring, complications arise where both countries attempt to collect the tax and the individual ends up caught in the middle.

Legal recognition and authentication of documents

Czech authorities, when dealing with a foreign person (even if it is a Slovak citizen from an EU Member State), often require:

• Extracts from the relevant register in Slovakia, where a legal entity is concerned.
•  (in some cases, especially for foundations and trust funds, in accordance with ).

Without the correct legal procedure, filings are rejected or deadlines are unnecessarily extended.

Table of risks and solutions

Holding companies vs. foundations vs. trust funds – comparison for a Slovak citizen

Each of the three structures has a different purpose and legal framework. Below is a brief comparison:

Most common mistakes and how to avoid them

Failure to register for tax

A Slovak citizen sets up a holding company but forgets to register it with the tax authority. They then fail to issue invoices properly and cannot claim input VAT. Once the tax authority discovers this, there is a risk of a fine of up to CZK 500,000 under the Tax Code and additional obligations.

Solution: Arrange tax registration immediately after entry in the Commercial Register. ARROWS attorneys in Prague will simplify the process—ensuring you do not have to deal with the authorities.

Incorrect setup of trust fund beneficiaries

The founder believes that the beneficiaries in the deed can be designated in an indefinite manner (for example, “all my descendants”). Czech legal practice and the interpretation of the law require that beneficiaries be specifically identifiable or identifiable on the basis of clearly defined criteria. Otherwise, the beneficiary clause may be invalid, leading to serious legal issues.

Solution: Secure proper legal advice from the very beginning. The attorneys at ARROWS will prepare the deed of foundation without legal weaknesses.

Neglect of international tax law

The foundation owns assets in the Czech Republic and in Austria and generates income there. It is unclear where this should be taxed. The Slovak founder addresses it only partially, and Austria, the Czech Republic and Slovakia “split” it between them. This leads to potential double taxation and complex disputes.

Solution: Engage an international tax law specialist from the outset. Thanks to the ARROWS International network, the attorneys at ARROWS handle precisely these complex cross-border cases and will ensure a correct and lawful solution for you.

Formal deficiencies in documentation

The deed of foundation is written in Czech, but the original documents from Slovakia are provided without a certified translation and notarisation. The registry court will reject the filing. This means unnecessary delays and the need to correct everything.

Solution: Have everything prepared in accordance with Czech legal standards, with the appropriate certified translations and notarisation. This may take longer, but it is the correct approach and avoids complications.

Lack of transparent accounting

A trust fund or foundation keeps its accounts orally or in a chaotic manner. Once an inspection takes place, the tax authority cannot verify what happened to the money. This leads to fines and suspicion.

Solution: From the beginning, ensure that the fund’s assets and money are recorded in accounting in accordance with Czech law. The attorneys at ARROWS will alert you to the legal and tax obligations you have.

Read also:

• Trust Funds and Foundations: Avoid Costly Tax and Structuring Mistakes
• Czech Trust Funds: Benefits, Setup Steps and Common Pitfalls
• Trust Fund vs Foundation Fund in the Czech Republic: Key Legal Differences
• How to Set Up a Czech Foundation with a Dual Structure (Governance + Strategy)
• CFO Checklist: 7 Legal Traps in Company Structures and Contracts in the Czech Republic