How to Open a Company or Branch in the Czech Republic as a Hungarian Business

If your Hungarian business is exploring expansion into the Czech market, understanding the precise legal requirements for establishing a company or branch in the Czech Republic is critical. This article provides specific answers to the procedural, tax, and compliance questions that Hungarian entrepreneurs face when entering the Czech business environment. 

Why Hungarian Businesses Choose the Czech Republic

The Czech Republic represents a strategic gateway to the European Union market. As neighboring countries with strong economic ties and bilateral agreements, Hungary and the Czech Republic share a double taxation treaty and simplified documentation requirements that make cross-border business establishment smoother than in many other jurisdictions. 

The Czech market offers Hungarian companies access to a highly skilled workforce, central European location, and a pro-business environment with a 21% corporate tax rate—competitive within the EU.​

ARROWS International network operates from Prague, at the heart of the European Union, providing Hungarian businesses with localized expertise and cross-border capabilities across 90 countries globally. Our law firm handles the establishment of over 150 joint-stock companies and 250 limited liability companies annually, with proven experience in facilitating foreign market entry.

Two Pathways: Czech Branch Office vs. Czech Limited Liability Company (s.r.o.)

Hungarian businesses have two primary options when establishing operations in the Czech Republic: opening a branch office (organizační složka) or forming a separate Czech limited liability company (společnost s ručením omezeným, or s.r.o.). The choice between these structures determines liability exposure, tax treatment, operational flexibility, and ongoing compliance obligations.​

Branch Office (Organizační Složka): Extension of Your Hungarian Company

A branch office in the Czech Republic is not a separate legal entity—it functions as a direct extension of the Hungarian parent company. This means:​

• The Hungarian parent company retains full, unlimited liability for all debts and obligations incurred by the Czech branch.​
• Business activities conducted in the Czech Republic must fall within the scope of the parent company's registered activities.​
• The branch must submit the parent company's financial statements to Czech authorities.​
• A Czech resident or person with Czech residency permit must be appointed as Head of the Branch.​

The registration process for a branch typically takes approximately 19 days and requires fewer formalities than establishing a separate company. However, this apparent simplicity masks significant liability risks: every contractual obligation, employment dispute, or regulatory penalty affecting the Czech branch directly impacts the Hungarian parent company's assets.

For immediate assistance with branch registration, contact ARROWS at office@arws.cz.

Czech Limited Liability Company (s.r.o.): Independent Legal Entity

A Czech s.r.o. is an independent legal entity that provides limited liability protection to its Hungarian shareholders. 

Key characteristics include:​

• Minimum share capital of only CZK 1 (approximately €0.04), making it one of the most accessible company structures in the European Union.​
• Shareholders' liability is limited to their capital contributions.​
• 100% foreign ownership is permitted without local partner requirements.​
• The company can conduct any lawful business activities without restriction to the parent company's scope.​
• Separate financial statements and tax reporting in the Czech Republic.

Formation of a Czech s.r.o. typically requires 15-25 business days when properly prepared, though expedited registration can be completed in as few as 5-10 days with comprehensive legal support. ARROWS law firm routinely handles accelerated company formations, ensuring all documentation meets Czech Commercial Register requirements on the first submission.

FAQ – Legal Tips about Choosing the Right Structure

1. As a Hungarian company, should I open a branch or form a Czech s.r.o.?

A: The decision depends on your liability tolerance and business objectives. If you want to protect your Hungarian company's assets from Czech business risks, an s.r.o. provides a legal firewall—debts and liabilities remain within the Czech entity. If you prefer simpler accounting and direct control, a branch may suffice, but understand that Czech obligations become Hungarian obligations. This assessment requires analysis of your specific industry risks, contract exposures, and growth plans. ​

2. Can I convert a Czech branch into an s.r.o. later if needed?

A: No, direct conversion is not legally possible. You would need to establish a new s.r.o. and transfer assets, contracts, and employees—a complex process involving multiple legal and tax considerations. Choosing the correct structure from the beginning saves significant time, costs, and legal complications. ​

2. Will I pay more taxes with a branch or an s.r.o.?

A: Both structures are subject to Czech corporate income tax at 21% on profits generated in the Czech Republic, though specific deductions and treaty benefits may differ. A branch's profits may also be subject to Hungarian taxation, with credit mechanisms under the bilateral tax treaty. An s.r.o. offers more opportunities for tax optimization through proper structuring, but these strategies must comply with both Czech and EU anti-avoidance regulations. For detailed tax planning, contact our tax specialists at office@arws.cz.

Step-by-Step Process: Establishing a Czech s.r.o. as a Hungarian Business

While the overall process may appear straightforward in theory, each step contains procedural details, documentation requirements, and legal traps that can delay registration or create future compliance issues. What follows is not a do-it-yourself guide but professional insight into the complexities that ARROWS navigates daily on behalf of foreign clients.

Step 1: Obtaining Czech Trade License (Živnostenský List)

Before a Czech s.r.o. can be registered in the Commercial Register, it must first obtain appropriate trade licenses from the Trade Licensing Office (Živnostenský úřad). The Czech Republic distinguishes between several categories of trades:​

• Unqualified trades (volná živnost): 81 different business activities requiring no special qualifications.
• Professional trades (řemeslná živnost): Activities requiring professional education or experience.​
• Licensed trades (koncesovaná živnost): Activities requiring state permission, such as financial services or transportation.​

Most Hungarian businesses will apply for unqualified trade licenses covering "production, trade and services not specified in Annexes 1-3 of the Trade Licensing Act." However, accurately categorizing your planned activities within Czech trade classifications requires understanding nuanced distinctions that differ from Hungarian business categories.

The Trade Licensing Office reviews the application and issues the trade license typically within 5-10 days. Required documents include:

• Application form identifying business activities​
• Criminal record certificate for all directors/founders​
• Proof of registered office address​
• Passport or national ID
• For non-EU nationals: valid long-term visa or residence permit​

Important consideration for Hungarian founders: As Hungarian citizens are EU nationals, you do not need a Czech residence permit to obtain a trade license or become a company director. However, if you plan to work directly in the Czech operations (beyond directorship functions), employment law considerations may apply.​

ARROWS handles all trade license applications, ensuring correct activity classification and compliance with Trade Licensing Office requirements. For assistance, write to office@arws.cz.

Step 2: Preparing the Founding Documents Before a Czech Notary

All Czech limited liability companies must be established through a notarial deed (notářský zápis) executed before a Czech notary public. This non-negotiable formal requirement applies regardless of the founders' nationality. The founding document is either:

• Memorandum of Association (společenská smlouva): When the company has multiple shareholders.​
• Deed of Foundation (zakladatelská listina): When the company has a single shareholder.​

The notarial deed must specify:

• Company name and registered office address​
• Business purpose (or statement that the company may conduct any lawful activity)​
• Amount of registered capital and each shareholder's contribution​
• Identification of all shareholders and directors​
• Rules for profit distribution​

Here is where Hungarian entrepreneurs often encounter unexpected complexity: Czech notaries require specific formal elements that may differ from Hungarian corporate documentation standards. For example, the registered office address must comply with strict Czech requirements—the premises must have an official building number, be approved for business use, display the company name visibly, and have a dedicated mailbox. 

Many Hungarian founders initially propose residential addresses or informal arrangements that Czech notaries reject.

Furthermore, if directors or shareholders will be Hungarian legal entities (rather than natural persons), those entities' governing documents must be reviewed by the Czech notary to confirm their capacity to hold shares or serve as directors under Czech law. This may require certified translations and additional verification.

ARROWS maintains relationships with experienced Czech notaries who regularly work with foreign founders, streamlining the notarization process and avoiding common documentation pitfalls. Contact us at office@arws.cz.

Step 3: Securing a Compliant Registered Office Address

Every Czech company must have a registered office address (sídlo společnosti) in the Czech Republic. This address serves as the official location for:​

• Receipt of all official correspondence from tax authorities, courts, and regulators​
• Company visibility to business partners and customers​
• Potential meetings with government inspectors​

Legal requirements for a registered office are strict and enforced:

• The premises must have an official building number
• The location must be approved for business use
• The company name and identification number must be visibly displayed at the address
• A functioning mailbox must be available for receiving mail
• The company must have legal authorization to use the premises (ownership or notarized consent from the property owner)

Many Hungarian entrepreneurs initially plan to use their Hungarian office address or a friend's Czech residence informally. This approach violates Czech law and will be rejected by the Commercial Register. Even if you successfully register with an improper address, subsequent inspections by tax authorities or regulatory bodies can result in substantial fines for non-compliance with registered office requirements.​

Virtual office solutions are legally permitted and widely used in the Czech Republic. ARROWS provides registered office services that meet all legal requirements, including proper signage, mail handling, and inspector meeting facilities. These services ensure compliance while minimizing overhead costs for Hungarian businesses testing the Czech market. For registered office solutions, write to office@arws.cz.​

Step 4: Criminal Record Certificates for Hungarian Directors and Shareholders

All individuals who will serve as directors or managers (jednatel) of the Czech s.r.o. must provide criminal record certificates. The good news for Hungarian founders: due to bilateral agreements between Hungary and the Czech Republic, Hungarian criminal record extracts do not require apostille certification when used in the Czech Republic.​

However, specific requirements still apply:

• The criminal record certificate must be no older than 90 days when submitted​
• The document must be officially translated into Czech by a certified translator​
• If the Hungarian director has resided in other countries for more than 3 months during the past 3 years, criminal records from those countries may also be required​

Shareholders who will not serve as directors generally do not need to provide criminal records, though this can vary depending on the specific circumstances and notary requirements.

A common mistake: Hungarian founders obtain their criminal record certificate immediately, then spend several weeks preparing other documentation. By the time they're ready for notarization, the certificate has expired and must be obtained again. ARROWS coordinates the entire timeline to ensure all documents remain valid through registration. Contact office@arws.cz for coordinated preparation.

Step 5: Opening a Czech Bank Account and Depositing Share Capital

Before the company can be registered in the Commercial Register, at least 30% of the registered share capital must be deposited into a special Czech bank account. While the minimum capital is only CZK 1, most companies establish a more substantial initial capital for credibility and operational purposes.

Opening a corporate bank account in the Czech Republic as a foreign founder involves several requirements:​

• Notarized founding documents
• Passports or national IDs of directors and shareholders
• Proof of registered office address
• Business plan or description of intended activities​
• In some cases, reference letters or proof of business experience​

Czech banks have become significantly more cautious about foreign-owned companies due to anti-money laundering regulations and increased scrutiny from the Czech National Bank. Banks frequently classify foreign directors or shareholders as "high-risk," triggering enhanced due diligence procedures that can delay account opening by weeks or even result in rejection.​

Hungarian founders benefit from EU membership, which generally makes Czech banks more receptive than for non-EU applicants. However, certain business activities trigger additional scrutiny regardless of nationality: financial services, cryptocurrency, international trade, marketing services, and cash-intensive businesses face heightened requirements.

ARROWS maintains banking relationships across multiple Czech institutions and can advise on the most suitable bank for your specific business profile, prepare documentation to satisfy enhanced due diligence requirements, and facilitate introductions that expedite account opening. For banking assistance, write to office@arws.cz.

Step 6: Commercial Register Filing and Company Registration

Once all preparatory steps are complete, the company must be registered in the Czech Commercial Register (obchodní rejstřík) maintained by regional courts. The company legally comes into existence only upon entry into the Commercial Register—not before.​

Required documentation for Commercial Register filing includes:​

• Notarized founding document (memorandum of association or deed of foundation)​
• Trade license extract​
• Proof of registered office (notarized consent or ownership documentation)
• Bank confirmation of deposited share capital​
• Specimen signatures of all directors​
• Criminal record certificates for directors

The registration application can be submitted:​

• Through a Czech notary public (fastest method, often processed same day)​
• At a Czech POINT office (regional submission locations)​
• Online via the Data Box system (if you already have a data box)​

The statutory deadline for Commercial Register processing is 5 working days from application submission. If the court does not register the company or request additional documents within this timeframe, the company is deemed automatically registered.​

In practice, the "5-day automatic registration" rarely provides comfort: if your documentation contains any deficiency, the court will request corrections, resetting the timeline and potentially requiring new notarizations or updated certificates. ARROWS' experience with hundreds of Commercial Register filings means we structure applications to pass review on first submission, avoiding delays and additional costs. For professional Commercial Register filing, contact office@arws.cz.

Step 7: Tax Registration and Data Box Activation

Within 15 days of Commercial Register registration, the new Czech s.r.o. must register with the local Financial Office (Finanční úřad) for:​

• Corporate income tax (daň z příjmů právnických osob)
• VAT registration if applicable (mandatory for non-resident businesses from the first taxable supply)​
• Status as an identified person (identifikovaná osoba) for EU trade​

Simultaneously with Commercial Register registration, the Czech Ministry of Interior automatically establishes a Data Box (datová schránka) for the company. This electronic mailbox system is the exclusive channel for official communication with Czech authorities—all correspondence from tax offices, courts, social security, and regulatory bodies is delivered only through the Data Box.

This is a critical trap for foreign-owned companies: If Hungarian directors do not have access to the Data Box, the company remains unaware of official notices, tax assessments, court summons, and compliance deadlines. Missing a single Data Box message can trigger:

• Late filing penalties of CZK 1,000 to CZK 500,000​
• Tax assessments becoming final without opportunity for objection​
• Court judgments in cases the company never knew existed​
• Potential company dissolution proceedings​

ARROWS provides Data Box monitoring services for foreign clients, ensuring all official communications are promptly received, translated, and actioned within required timeframes. Don't risk CZK 500,000 fines due to missed deadlines—contact office@arws.cz.

The Branch Office Registration Process: Key Differences

If your Hungarian company determines that a Czech branch office better serves your strategic objectives, the registration process shares some similarities with s.r.o. formation but includes specific differences.​

Required Documentation for Branch Registration

The Czech Commercial Register requires:​

1. Parent company's certificate of incorporation from the Hungarian Companies Registry (cégnyilvántartás), with official Czech translation​.
2. Articles of association or bylaws of the Hungarian parent company, in Czech translation​.
3. Corporate resolution establishing the Czech branch and appointing the Head of Branch, executed by authorized representatives of the Hungarian company​.
4. Extract showing current status of the Hungarian parent company (similar to a "good standing certificate")​.
5. Trade license issued by the Czech Trade Licensing Office for the branch's activities.
6. Proof of Czech registered office with notarized owner consent.
7. Criminal record certificate for the appointed Head of Branch.
8. Specimen signature of the Head of Branch, notarized by Czech notary​.

All documents originally in Hungarian must be professionally translated into Czech by a certified translator, with proper verification. Due to EU membership and bilateral agreements between Hungary and the Czech Republic, superlegalization (apostille) is not required for most corporate documents from Hungary.

​

Appointing the Head of Branch

The Head of Branch (vedoucí odštěpného závodu) must be either:​

• A Czech citizen, or
• A foreign national (including Hungarians) with valid Czech residency permit

The Head of Branch is entered in the Czech Commercial Register and has authority to undertake all acts concerning the branch on behalf of the Hungarian parent company. This is different from an s.r.o. director, who may be a foreign national without Czech residency.​

If your intended Head of Branch is a Hungarian manager who will relocate to the Czech Republic, they must secure appropriate Czech residency before branch registration can be completed. ARROWS provides immigration law services coordinating business establishment with residency applications. Contact office@arws.cz for integrated solutions.

Branch Registration Timeline and Costs

Branch registration typically requires approximately 19 days from initial consultation to Commercial Register entry. The Commercial Register filing fee is CZK 6,000 (approximately €240). Additional costs include trade license fees (approximately CZK 1,000-2,000), notary fees, translation costs, and legal representation.​

An important consideration: While branch registration may appear less expensive initially than forming an s.r.o., the ongoing accounting complexity and liability exposure often make branches more costly over time. ARROWS provides comprehensive cost-benefit analysis comparing total 3-year and 5-year costs of branches versus subsidiaries, helping Hungarian businesses make informed decisions. For financial projections, write to office@arws.cz.​

Tax Obligations in the Czech Republic

Both Czech s.r.o. companies and branches of Hungarian companies are subject to Czech corporate income tax at 21% on profits generated in Czech Republic operations. This rate increased from 19% in 2024 and applies to all business profits, including capital gains.​

VAT Registration Requirements

For non-resident businesses (including Hungarian companies operating through Czech branches), there is zero threshold for Czech VAT registration—the obligation arises from the first taxable supply of goods or services in the Czech Republic.​

Czech VAT registration requires:​

• Submission of the Hungarian company's certificate of incorporation with Czech translation
• Trade license or proof of business activity​
• Articles of association​
• Directors' identification documents​
• Power of attorney if using a representative​
• For non-EU companies: appointment of a fiscal representative (not required for Hungarian companies as EU members)​

Czech VAT returns are due monthly, with filing and payment deadline on the 25th of the following month. Additionally, most taxpayers must submit a Control Statement (kontrolní hlášení) monthly, providing detailed transaction-level VAT information.​

Penalties for VAT non-compliance are severe:

• Late control statement: CZK 1,000 to CZK 500,000 depending on circumstances​
• Obstructing tax authority inspections: up to CZK 500,000
• Systematic non-compliance: penalties can exceed CZK 1 million​

ARROWS provides full VAT compliance services for foreign companies, including registration, monthly return preparation, control statement filing, and representation in tax audits. Protect your Hungarian company from Czech tax penalties—contact office@arws.cz.

Double Taxation Treaty Benefits

The tax treaty between Hungary and the Czech Republic provides mechanisms to eliminate double taxation on business profits, dividends, interest, and royalties. Hungarian companies operating through a Czech permanent establishment (branch) may be able to credit Czech corporate tax against Hungarian tax obligations, though specific rules and limitations apply.​

Properly structuring transactions between your Hungarian parent company and Czech operations to optimize treaty benefits while complying with transfer pricing regulations requires sophisticated tax planning. ARROWS collaborates with Hungarian tax advisors to develop compliant cross-border tax strategies. For coordinated Hungarian-Czech tax planning, write to office@arws.cz.

Comparison Table: Branch vs. Czech s.r.o.

Risks and Penalties	How ARROWS Helps (office@arws.cz)
Unlimited liability exposure – Parent company fully liable for Czech branch debts, employment claims, and regulatory penalties.	Corporate structure advisory – We analyze your risk profile and recommend liability-limiting alternatives.
Commercial Register rejection – Incomplete or improper documentation delays registration by weeks.	Professional document preparation – We ensure first-submission approval with compliant founding documents.
Missed Data Box notices – Foreign directors unaware of official communications face automatic penalties.	Data Box monitoring service – We receive, translate, and action all official notices within deadlines.
VAT registration violations – Non-resident businesses face immediate registration requirement with penalties from CZK 1,000 to CZK 500,000.	VAT compliance management – Full registration, monthly returns, and control statement filing.
Criminal record expiration – 90-day validity means documents expire during preparation, requiring re-application.	Timeline coordination – We synchronize all document collection to maintain validity through registration.

Ongoing Compliance Obligations You Cannot Ignore

Establishing your Czech company or branch is only the beginning. Czech businesses face continuous compliance obligations that, if neglected, result in substantial penalties, enforcement proceedings, or even involuntary dissolution.

Annual Financial Statements and Publication

All Czech s.r.o. companies must prepare annual financial statements (účetní závěrka) within the statutory deadline and publish them in the Collection of Documents (Sbírka listin) maintained by the Commercial Register. Failure to file financial statements results in:​

• Fines up to 3% of the company's assets imposed by the tax authority​
• Fines up to CZK 100,000 imposed by the Registry Court​
• Potential dissolution proceedings for repeated violations​

The financial statements must be approved by the shareholders' general meeting and, if the company exceeds certain thresholds, audited by an independent auditor. As of 2026, mandatory audit requirements apply only to medium and large companies (exceeding two of three criteria: assets > CZK 120 million, turnover > CZK 240 million, employees > 50 for two consecutive periods).​

ARROWS provides full accounting services for foreign-owned Czech companies, ensuring timely preparation, approval, and publication of financial statements in compliance with Czech accounting standards. Contact office@arws.cz.

Ultimate Beneficial Owner (UBO) Register

All Czech companies must register their Ultimate Beneficial Owners in the UBO Register (Evidence skutečných majitelů) maintained by the Commercial Register. 

A beneficial owner is generally defined as any natural person who:

• Holds more than 25% of voting rights or shares​
• Receives more than 25% of profits
• Exercises control over the company through other means​

For a Hungarian-owned Czech s.r.o., this typically means identifying the ultimate Hungarian natural persons who own or control the Hungarian parent company (if structured through a Hungarian legal entity). Registration must be completed within 30 days, with violations subject to fines up to CZK 500,000.​

The UBO identification process is complex when ownership involves multiple layers, trusts, or nominee arrangements. ARROWS analyzes ownership structures under Czech UBO criteria and completes accurate registration. For UBO compliance, write to office@arws.cz.

Employment and Social Security Obligations

If your Czech operations employ staff, multiple employment law obligations arise:​

• Employment contracts must comply with Czech Labor Code (zákoník práce).​
• Foreign employees (including Hungarian citizens) must be registered with the Labor Office before beginning work, with violations triggering fines up to CZK 3 million​.
• Social security and health insurance contributions must be registered within 8 days of first employee.​
• Payroll tax withholding and monthly reporting to tax authorities.

New rules effective October 1, 2025 require all foreign employees (including EU citizens) be registered before commencing work—no grace period for starting while paperwork is pending. Even inadvertent violations subject both employer and employee to penalties for "undeclared work."

ARROWS provides employment law compliance services, including preparation of Czech employment contracts, foreign employee registrations, and coordination with Czech payroll providers. Don't risk CZK 3 million employment penalties—contact office@arws.cz.

Why Experience Matters: The Hidden Complexity of "Simple" Czech Company Formation

Throughout this article, we've emphasized that Czech company formation involves more complexity than it initially appears. This is not rhetoric—it's the professional reality we observe daily when correcting problems for foreign businesses that attempted DIY registration or used inexperienced providers.

Consider these common scenarios ARROWS has resolved:

• A Hungarian manufacturing company established a Czech s.r.o. using online templates, only to discover their trade license didn't cover their actual production activities—operations were technically illegal until we obtained correct licensing.
• A Hungarian technology firm successfully registered their company but missed a single Data Box message from the tax authority; by the time they discovered the issue, automatic penalties exceeded CZK 85,000 for violations they were unaware of committing.​
• A Hungarian retail business formed a Czech branch without understanding unlimited liability implications; when the branch faced a commercial dispute, the Hungarian parent company's assets became exposed to Czech court judgments.​

These failures weren't due to negligence—they resulted from reasonable business people not realizing that Czech regulations contain traps invisible to those unfamiliar with daily practice in this jurisdiction.

For example, Czech registered office requirements seem straightforward: provide an address. But the regulations specify that the company name and identification number must be visibly displayed at the premises, a requirement that virtual office providers sometimes neglect. During a tax inspection, inability to demonstrate compliant signage triggers penalties and raises questions about the company's legitimacy.​

Similarly, the "90-day validity" rule for criminal record certificates appears simple—but coordinating Hungarian criminal records, official translations, Czech notary availability, and Commercial Register filing windows so that all elements remain valid simultaneously requires careful project management that many founders underestimate.​

ARROWS handles this agenda daily, managing dozens of company formations simultaneously, with systems ensuring no deadline is missed and no requirement is overlooked. This specialization significantly reduces your risk and saves the time you would otherwise spend learning Czech procedures through expensive trial and error.

ARROWS International: Your Partner from Prague, European Union

ARROWS law firm operates from Prague, at the heart of the European Union, with deep expertise in facilitating cross-border business establishment for foreign companies entering the Czech market. Our unique value proposition for Hungarian businesses includes:

• Bilingual legal teams familiar with both Hungarian and Czech legal systems, able to identify critical differences and avoid costly misunderstandings.
• ARROWS International network spanning 90 countries, enabling us to coordinate multi-jurisdictional matters when your expansion extends beyond the Czech Republic.
• Established relationships with Czech notaries, banks, tax authorities, and the Commercial Register, accelerating procedures and resolving obstacles efficiently.
• Comprehensive service offerings covering every aspect of your Czech operations: company formation, ongoing tax compliance, employment law, commercial contracts, litigation representation, intellectual property, and regulatory licensing.

We support over 150 joint-stock companies, 250 limited liability companies, and 51 municipalities and regions, with proven capability handling complex corporate structures and international ownership arrangements. ARROWS is also known for speed and high quality, combining rapid turnaround times with meticulous attention to legal detail.

Interestingly, we also welcome innovative business ideas and investment opportunities—we can sometimes connect clients with one another when business or investment interests align, creating unexpected value beyond legal services.

ARROWS is insured for damages up to CZK 500,000,000, providing Hungarian businesses with financial protection when entrusting critical company formation and compliance matters to our firm.

Your Next Step: Professional Czech Company Formation

If you're ready to establish your Hungarian business in the Czech Republic—whether through a branch office or a new Czech s.r.o.—the safest and most efficient path forward is engaging experienced legal counsel who handles this specific agenda daily.

Do not risk:

• Months of delays due to rejected Commercial Register applications
• CZK 500,000 penalties for missed Data Box communications or VAT violations
• Unlimited liability exposure from improperly structured branches
• CZK 3 million employment fines for foreign employee registration failures
• Company dissolution proceedings for compliance failures

ARROWS law firm, based in Prague, European Union, provides comprehensive company formation services specifically designed for foreign businesses entering the Czech market. We handle every step—from initial structure selection through post-registration compliance—ensuring your Czech operations begin with a solid legal foundation.

For immediate assistance with opening your company or branch in the Czech Republic, contact ARROWS at office@arws.cz. Our legal team will review your specific situation, recommend optimal structures, provide detailed timeline and cost projections, and begin the formation process immediately upon engagement.

Your Czech expansion deserves professional legal support backed by CZK 500 million in insurance coverage, ARROWS International network capabilities, and proven expertise managing Hungarian-Czech business establishments. Don't leave this critical foundation to chance—contact office@arws.cz today.

FAQ – Most Common Legal Questions About Opening a Czech Company as a Hungarian Business

1. Do I need to travel to the Czech Republic to establish my company?

A: Not necessarily. Many formation steps can be completed remotely using a power of attorney authorizing ARROWS to act on your behalf. However, at least one in-person visit to a Czech notary is typically required for founding document execution, or for executing the power of attorney itself if you prefer maximum remote processing. We coordinate efficient timelines minimizing travel requirements. Contact ARROWS at office@arws.cz to discuss your specific situation.​

2. How long does the entire company formation process take?

A: A Czech s.r.o. can be formed in 15-25 business days under normal circumstances, or 5-10 days with expedited processing and complete documentation readiness. However, delays frequently occur due to bank account opening (which can add 2-4 weeks), obtaining Hungarian criminal records, or correcting documentation deficiencies. ARROWS' structured preparation process identifies and resolves potential delays before they occur, ensuring reliable timelines. For immediate assistance starting your formation, write to office@arws.cz.

3. What are the total costs for establishing a Czech company?

A: Basic governmental fees for s.r.o. formation include: Commercial Register filing fee (CZK 6,000), trade license fee (CZK 1,000-2,000), notary fees (CZK 2,000-5,000), and criminal record certificates. Total governmental costs typically range CZK 10,000-15,000 (approximately €400-600). Professional legal services, registered office, translation, and accounting setup add to total investment. ​

4. Can I be the director of my Czech company while residing in Hungary?

A: Yes. Czech law imposes no residency requirement for s.r.o. directors—foreign nationals, including Hungarians residing in Hungary, may serve as directors without Czech residence permits. However, practical considerations arise: you must be available for official meetings in the Czech Republic, and if you will perform operational work (beyond directorship governance functions), employment permit requirements may apply. ​

5. What happens if I fail to comply with Czech tax filing deadlines?

A: Czech tax penalties escalate rapidly. Late VAT returns trigger immediate penalties starting at CZK 1,000 and increasing to CZK 500,000 for systematic violations. Missing control statement deadlines results in automatic CZK 1,000 to CZK 50,000 penalties, and obstructing tax inspections can reach CZK 500,000. More dangerously, all official communications about these penalties arrive exclusively through your Czech Data Box—if you're not monitoring it, penalties accumulate without your knowledge. ​

6. Is my Hungarian company protected by professional indemnity insurance when working with ARROWS?

A: Yes. ARROWS carries professional indemnity insurance covering up to CZK 500,000,000 (approximately €20 million), protecting our clients against potential errors or omissions in our legal services.[article premise] This substantial insurance coverage—far exceeding typical law firm policies—provides Hungarian businesses with financial security when entrusting complex Czech company formations and compliance matters to our firm. For engagement details, contact office@arws.cz.