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How Luxembourgish companies can establish a business presence in the Czech Republic

Mgr. Vojtěch Sucharda
Mgr. Vojtěch Sucharda
Attorney|Czech Bar Association Reg. No. 14692
ARROWS law firm
Published:

When Luxembourgish companies enter the Czech market, they face a fundamental choice that will shape their entire operational structure, tax obligations, and legal liability.

Lawyers discussing business strategies for Luxembourgish companies entering the Czech market.

Key takeaways

Structure: Subsidiary offers liability protection; Branch offers initial simplicity but unlimited liability.
Tax: Corporate Tax rate is 21%. Dividends to Luxembourg parent are exempt if holding >10% for >12 months.
VAT: Registration mandatory if turnover > CZK 2 million.
Timelines: Plan for 2-3 months for full operational readiness.
Compliance: Mandatory UBO registration, Data Box monitoring, and electronic tax filing are strictly enforced.

Expanding to Luxembourg?

We will guide you through the entire process and mitigate all legal and tax risks.

ARROWS law firm
245 007 740consultation@arws.cz

Conclusion

Establishing a business presence in the Czech Republic represents a significant strategic step. Whether through a subsidiary or branch, the process involves navigating legal procedures that are strictly enforced.

The cost of engaging expert guidance is modest compared to the cost of correcting errors or defending against regulatory violations. ARROWS Law Firm is insured for professional liability damages up to CZK 400,000,000, giving you security that your implementation is handled by professionals. Contact us at consultation@arws.cz to discuss your specific situation.

DO YOU NEED LEGAL HELP?

Get in touch — we're happy to help.

ARROWS law firm
245 007 740consultation@arws.cz

FAQ – Frequently asked legal questions

1. Can I use a virtual office address as my registered office?

Yes, provided you have the written, verified consent of the property owner. The company must be contactable at this address.

2. What residence requirements apply to the Head of Branch?

Non-EU citizens generally require a residence permit to be entered into the Commercial Register. EU citizens must typically provide a simplified proof of stay or a delivery address in the Czech Republic.

3. What tax rate applies to my Czech subsidiary's profits?

The corporate income tax rate is 21% (effective 2024).

4. Can I avoid establishing a Czech presence by operating through agents?

Only if the agent is genuinely independent. Dependent agents create a taxable permanent establishment.

5. What happens if I fail to register the Ultimate Beneficial Owner?

You face fines up to CZK 500,000, and the company cannot pay out dividends or exercise voting rights.

6. How much does it cost to establish a Czech subsidiary?

Total costs (court fees, notary, translation, legal assistance) typically range from EUR 3,000–7,000 depending on complexity.

DO YOU HAVE MORE QUESTIONS? GET IN TOUCH

ARROWS law firm
245 007 740consultation@arws.cz

About the author

Mgr. Vojtěch Sucharda
Mgr. Vojtěch Sucharda

Associate, partner

LinkedIn|Czech Bar Association Reg. No. 14692
Managing Partner ARROWS International | Head of Legal Practice Group ETL Global
sucharda@arws.cz245 007 740

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Disclaimer:

The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (consultation@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.