Expanding Your Czech Business to Slovenia: A Legal and Practical Guide

Are you planning to expand your Czech company into the Slovenian market? Establishing a company or a branch office in Slovenia is not overly complicated, but it requires a thorough understanding of Slovenian legal regulations and following the correct administrative procedures. In this guide, our Prague-based law firm will clarify which legal forms are available to you, what you need to prepare, and how to avoid common pitfalls. Knowledge of these steps under Czech and international standards will save you time and resources while minimizing the risk of administrative complications.

Quick Summary

• A Czech company can choose from two main legal forms in Slovenia: establishing an independent Slovenian limited liability company (d.o.o.) or setting up a branch office (podružnica) of its Czech parent company. Each form has different capital requirements, liability structures, and tax implications.
• For founders who are not Slovenian residents, obtaining a Slovenian tax number (davčna številka) before the incorporation process is crucial. Slovenian authorities primarily use electronic communication (the SPOT system); however, for foreign legal entities, the assistance of a notary is often necessary.
• Registration for taxes, social security, and health insurance must be handled with the Slovenian authorities (FURS, ZZZS) according to local law. This is the most frequently overlooked step, often leading to sanctions and penalties.

Choosing a Legal Form: Independent Company vs. Branch Office

When entering the Slovenian market, you face a fundamental decision regarding the choice of legal form, which has a long-term impact on your liability, tax obligations, and administrative burden. This is not merely a formal act of registration, but a strategic decision that will influence the future development of your business.

The first and most common solution is establishing an independent Slovenian limited liability company (družba z omejeno odgovornostjo, abbreviated as d.o.o.). By doing so, you create a new, separate legal entity under Slovenian law with its own legal personality.

This entity enters into legal relationships in its own name and bears responsibility for its obligations only up to the value of its own assets.

The Czech parent company is thus protected from risks arising from business activities in Slovenia. Should the Slovenian d.o.o. face difficulties, the Czech firm is liable only up to the amount of its unpaid capital contribution, which must be paid before registration.

The second option is establishing a branch office (podružnica) of your Czech company. A branch office does not have its own legal personality and always acts on behalf of its Czech parent company. This means that all legal acts are performed on behalf of the parent company, and the Czech firm remains indefinitely liable for the branch's obligations with all its assets.

Comparison of Both Variants

Establishing a d.o.o. is administratively more demanding and requires a minimum share capital of EUR 7,500, but it offers a clear separation of risks and assets. Setting up a branch office does not require a capital contribution, but its accounting and tax integration with the parent company can be more complex in practice and carries the risk of unlimited liability for the Czech company.

For Czech companies planning a long-term presence on the Slovenian market, establishing an independent d.o.o. is usually recommended. A branch office is more suitable for one-off projects or for commercial representation without deeper involvement.

Related Questions on Choosing a Legal Form

1. Can I establish a Slovenian d.o.o. without visiting Slovenia in person?
Yes, this is possible through a power of attorney granted to a lawyer or a notary. If the Czech managing director holds a Slovenian qualified certificate, some steps can be taken online via the SPOT portal, but for foreign founders (legal entities), the assistance of a notary is usually essential.

2. What are the minimum costs for establishing a d.o.o. in Slovenia?
The minimum share capital is EUR 7,500. To this, one must add notary fees (in the case of a foreign shareholder), document translation costs, and legal fees. Administrative fees and costs for legal representation typically range from EUR 500 to EUR 1,500 depending on the complexity of the structure.

3. If I establish a branch office, what is my liability?
A branch office is not a separate legal entity. All obligations arising from the branch's activities are direct obligations of the Czech parent company. The Czech firm is therefore liable with all its assets.

Practical Steps for Establishing a Slovenian d.o.o.

The process of establishing a Slovenian d.o.o. consists of several sequential steps. The entire process usually takes 1 to 3 weeks if all documents are correctly prepared. Delays most often occur when obtaining Slovenian tax numbers for Czech entities.

Step 1: Obtaining a Slovenian Tax Number and Preparing Documents

Before the actual incorporation, both the Czech parent company and its managing directors (natural persons) must obtain a Slovenian tax number (davčna številka). Without this identifier, the company cannot be established.

Subsequently, the founding document must be prepared. This is either the Articles of Association (Družbena pogodba) or the Deed of Establishment (Akt o ustanovitvi), which contains the basic information about the company.

Furthermore, you will need:

• An extract from the Czech Commercial Register for the parent company (officially translated into Slovenian, and in some cases, provided with an apostille).
• Copies of the managing directors' identity documents.
• Consent from the property owner to locate the registered office in Slovenia (with a verified signature).

Step 2: Opening a Bank Account and Paying Up Capital

Before submitting the proposal for the d.o.o.'s entry into the Slovenian register, you must pay the minimum share capital of EUR 7,500 into a temporary bank account. In Slovenia, banks are subject to strict Anti-Money Laundering (AML) regulations, so they often require the personal presence of the managing director for identification.

Some banks allow the process to be handled remotely or via video call, but this is not the rule. After the capital is deposited, the bank issues a certificate of deposit, which is a mandatory attachment for the registration.

Step 3: Entry into the Court Register

After completing the previous steps, a notary or authorized person submits the proposal for the d.o.o.'s entry into the Slovenian Court Register (Sodni register), which is managed by the AJPES agency.

The proposal must be complete and formally correct. The proposal must include the Articles of Association, the bank certificate of capital deposit, and the resolution appointing the managing directors. If a foreign entity is establishing the company, certified translations of foreign documents must also be submitted.

The court usually decides on the registration within 3 to 5 business days. After registration, the company receives a registration decision and is assigned an ID number (matična številka).

Frequently asked questions regarding the establishment of a d.o.o.

1. How long does it take to register a d.o.o. in the commercial register?
After submitting a complete application, it usually takes 3 to 5 working days. However, the entire process, including the preparation of tax numbers and opening a bank account, realistically takes 2 to 4 weeks.

2. Which documents from the Czech Republic do I need to have translated into Slovenian?
An extract from the Czech Commercial Register for the Czech parent company (not older than 3 months) and, if the specific situation requires it, a criminal record extract for the directors. Translations must be provided by a certified court translator.

3. Can I deposit the share capital in EUR, or must it be in the local currency?
Slovenia is a member of the eurozone, and the currency is the Euro (EUR). The contribution must be made in Euros.

Tax and Social Security Registration

Once your Slovenian d.o.o. is entered into the register, registration obligations towards state institutions follow.

Tax and VAT Registration

The company must report to the Slovenian Financial Administration (FURS). Corporate income tax (davek od dohodkov pravnih oseb) requires mandatory registration, and the current rate is 22%.

VAT registration (DDV) is mandatory if the expected or achieved turnover exceeds EUR 50,000 within 12 months. Voluntary registration immediately after incorporation is also possible. The standard VAT rate is 22%, with a reduced rate of 9.5%.

Social and Health Insurance

If the company has employees (including a director on an employment contract), it must register them in the social insurance system with the ZZZS (Zavod za zdravstveno zavarovanje Slovenije). Registration must take place no later than the day the employee starts work (before the commencement of work duties).

Contributions in Slovenia are divided between the employee and the employer. The employer pays insurance premiums amounting to 16.1% on top of the gross salary. 22.1% is deducted from the employee's gross salary.

Accounting and Bookkeeping

A Slovenian d.o.o. must maintain double-entry bookkeeping in accordance with Slovenian Accounting Standards (SRS) or IFRS. Financial statements are submitted to the AJPES agency within 3 months after the end of the accounting period (usually by March 31st).

For Czech companies, it is essential to hire a local accounting firm to ensure compliance with local legislation. Our attorneys at ARROWS law firm have extensive experience in handling these international matters and can assist clients in setting up such cooperation.

Frequently asked questions regarding tax and insurance obligations

1. Do I need to register for VAT immediately after establishing the d.o.o.?
It is mandatory only upon exceeding a turnover of EUR 50,000. However, if you plan to trade with a Czech parent company or purchase goods from the EU, voluntary registration right at the beginning is often beneficial.

2. What tax rate do I pay on profits?
The corporate income tax rate in Slovenia is currently 22%.

3. Where can I find a local accountant for bookkeeping?
Our Prague-based law firm, ARROWS, can help you select a qualified accountant who understands the specifics of international trade. Contact us at office@arws.cz.

Who can you contact?

Establishment of an organizational unit (branch) of a Czech company

If you decide to establish an organizational unit (podružnica), the process is administratively simpler but requires thorough preparation of documents from the Czech Republic.

Advantages and risks of an organizational unit

The main advantage is the absence of a minimum share capital requirement. The disadvantage is the unlimited liability of the Czech parent company and the fact that the branch is not a separate legal entity. Although the branch in Slovenia is maintained separately for tax purposes, it remains legally part of the Czech company.

Process of establishing an organizational unit

Establishment requires a decision by the statutory body of the Czech company to set up a branch, the determination of its registered office in Slovenia, and the appointment of a branch manager (zastopnik).

Documentation for registration must be precise. The application for entry into the register must include an extract from the Czech Commercial Register, the articles of association, a financial report, and the decision to establish the branch.

Registration of a podružnica is subject to a fee, though the fees are lower than those for a d.o.o.

Tax aspects and the Double Taxation Treaty

A double taxation treaty is in place between the Czech Republic and Slovenia. Correct tax structuring is crucial for optimizing financial flows.

Corporate Income Tax

A Slovenian d.o.o. is a tax resident in Slovenia and pays tax on its worldwide income at a rate of 22%. An organizational unit only pays tax in Slovenia on profits attributable to that permanent establishment.

Dividends and profit transfer

If a Slovenian d.o.o. pays out profit to a Czech parent company (s.r.o. or a.s.), the rules under the EU Parent-Subsidiary Directive apply. If the Czech parent holds at least a 10% stake in the Slovenian subsidiary for at least 24 months, the dividend payment in Slovenia is exempt from withholding tax.

If the conditions of the directive are not met, a different procedure applies. If the directive's conditions are not met, withholding tax is applied according to the Double Taxation Treaty. The rate is usually 5% (when holding at least 25% of the capital) or 15% in other cases.

In the Czech Republic, dividends received from a subsidiary (provided the shareholding and holding period conditions are met) are generally exempt from Czech corporate income tax.

Frequently asked questions regarding taxes

1. What tax do I pay on the profits of a Slovenian d.o.o.?
A Slovenian d.o.o. pays a 22% corporate income tax.

2. If I transfer profit from Slovenia to the Czech Republic, will I pay withholding tax?
If you meet the conditions of the EU Directive (min. 10% stake), the withholding tax is 0%. Otherwise, a reduced rate according to the treaty (5% or 15%) applies.

3. Do I have to report the Slovenian d.o.o. to the Czech tax authorities?
Income (dividends) flowing to the Czech Republic must be included in the Czech tax return, even if they may be exempt. The existence of a foreign subsidiary is reported in the annex to the tax return.

Risks and Sanctions	How ARROWS Assists (office@arws.cz)
Rejection of registration due to errors in documentation: Incorrect wording in the Articles of Association or the absence of Slovenian tax numbers lead to rejection.	Preparation and review of documentation: Our attorneys in Prague ensure the acquisition of tax numbers for Czech entities and draft all documentation in full compliance with Slovenian law.
Non-compliance with tax obligations and fines: Late VAT registration or failure to file returns can lead to fines in the thousands of euros (up to EUR 30,000 for a legal entity).	Registration and tax advisory: We ensure timely registration with the Financial Administration of the Republic of Slovenia (FURS) and, in cooperation with tax advisors, set up a compliance calendar.
Illegal employment (unregistered employees): Failure to register an employee in the social security system before they start work is sanctioned with high fines (up to EUR 20,000).	Employment law agenda: We prepare employment contracts and ensure immediate registration of employees into the social security system under local regulations.
Failure to meet accounting obligations: Failure to submit an annual report to AJPES is an offense with a fine of up to several thousand euros and the risk of deletion from the register.	Accounting oversight: We assist with selecting an accountant and oversee the fulfillment of corporate obligations in accordance with Slovenian standards.

Practical tips for Czech companies

The fundamental question is: How much time and money do you want to invest in the process of entering the Slovenian market? If you want to proceed safely and without the risk of failure, there are several proven practices:

The first piece of advice concerns the choice of legal form. Firstly, if the basis of your Slovenian operation will be the purchase, sale, or distribution of goods, it is almost always recommended to establish a separate d.o.o. (limited liability company). While a branch office is administratively simpler, in practice, it may encounter distrust from business partners.

Secondly, do not underestimate the necessity of a Slovenian tax number for Czech directors. This process can take up to a week, and without it, you cannot move forward. Start with this step first.

The third tip concerns finances. Thirdly, have a capital of EUR 7,500 ready, as a d.o.o. cannot be established without its payment. A contribution in kind is possible, but it requires an expert appraisal and complicates the entire process.

Fourthly, turn to experts. The legal team at ARROWS law firm in Prague has a network of partners in Slovenia and can coordinate the entire process so that you do not have to study Slovenian statutes yourself.

Operational and administrative issues

Risks and Sanctions	How ARROWS Assists (office@arws.cz)
Incorrect choice of legal form: Choosing a branch office in a situation where a d.o.o. is appropriate can lead to unwanted taxation of the parent company in Slovenia.	Consultation on legal form: ARROWS law firm in Prague will help you choose the optimal legal form based on an analysis of your business plan.
Problems with bank accounts: Banks often refuse to open accounts for foreign owners without a business history in Slovenia.	Assistance with banking relations: We have contacts at banks open to foreign entrepreneurs and will assist with the compliance process.
Language barrier: The official language is Slovenian. Documents in Czech or English are not accepted by authorities without a certified translation.	Provision of translations and interpreting: We arrange certified translations of all necessary documents and handle communication with authorities in Slovenian.

Conclusion

Establishing a company or branch in Slovenia requires a systematic approach. The choice between a d.o.o. and a branch office is crucial and should be made with regard to tax implications and the level of risk you are willing to bear. The minimum capital of EUR 7,500 for a d.o.o. and a tax rate of 22% are the basic parameters you must account for.

Experience is irreplaceable in this process. Our Prague-based attorneys deal with these matters regularly and have extensive experience with the expansion of Czech companies into the Adriatic region. Our team can efficiently organize all steps to ensure your company is registered correctly.

ARROWS law firm is insured for up to 400 million CZK and has extensive experience in resolving cross-border legal and tax matters. We cooperate with major Czech companies and investors. By turning to us, you can be sure you are working with lawyers who understand both the Czech and international business environments.

Do not hesitate to contact us. If you have specific questions about establishing a company in Slovenia or need legal assistance, write to us at office@arws.cz to arrange a consultation.

FAQ – Frequently asked legal questions regarding company or branch establishment in Slovenia

1. How long does the entire d.o.o. registration process in Slovenia take?
The entry into the register itself takes 3–5 days. However, preparation (obtaining tax numbers, translations, opening an account) usually takes 2 to 3 weeks. With our help, the process can be accelerated through efficient coordination.

2. Can I manage a Czech company and a Slovenian d.o.o. from a single office in the Czech Republic?
A Slovenian company must have its official registered office (address) in Slovenia. The place of management can affect tax residency. If the company is managed exclusively from the Czech Republic, the Czech tax authority may claim taxation based on the place of effective management. We recommend a consultation to correctly set up "substance" in Slovenia.

3. What happens if I do not pay the share capital on time?
For a d.o.o., the monetary contribution (EUR 7,500) must be fully paid before filing the proposal for entry into the register. Without bank confirmation of the deposit, the court will not register the company.

4. Do I need to employ a local branch manager if I set up a branch office?
A branch office must have a designated manager (zastopnik). This person does not have to be employed full-time and does not need to be a Slovenian citizen, but they must have a Slovenian tax number.

5. What currency do I use for the accounting of a Slovenian d.o.o.?
Slovenia uses the Euro (EUR). Accounting and financial statements are maintained in Euros.

6. If I decide to close a Slovenian d.o.o., how long will it take?
There is a so-called simplified liquidation (without formal liquidation) if all shareholders declare they have settled all debts. This is a fast process. Classic liquidation takes at least 6 months, usually longer. Contact us at office@arws.cz to assess the best course of action.

Disclaimer:The information contained in this article is for general informative purposes only and serves as a basic guide to the subject matter. While we strive for maximum accuracy, legal regulations in the Czech Republic are subject to change. To verify the current wording of legislation and its application to your specific situation, it is essential to contact our Prague-based law firm, ARROWS, directly (office@arws.cz). 

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