How to Set Up a Company or Branch in the Czech Republic for Swiss Businesses

Expanding your Swiss business into the Czech Republic offers a strategic gateway to the European Union. This guide provides clear, practical answers on how to set up a company or branch, tailored for Swiss investors. As a leading Czech law firm in Prague, EU, with deep experience assisting foreign clients, ARROWS has the expertise to make your market entry a success. If you are looking for an English-speaking lawyer in Prague to help you navigate this process, you have found the right resource.

Do you need advice on this topic? Contact the ARROWS law firm by email office@arws.cz or phone +420 245 007 740. Your question will be answered by "Mgr. Vojtěch Sucharda", an expert on the subject.

The Czech Advantage: Why Swiss Companies Thrive in Prague

The Czech Republic provides a stable and predictable legal environment, fully integrated into the EU single market. For Swiss businesses, this is not just an opportunity for expansion but a move into a legally fortified jurisdiction that offers multiple layers of security for your investment.

Under Czech law, foreign and domestic entities are treated identically, ensuring a level playing field in all areas, from property rights to investment incentives. This principle of non-discrimination means your Swiss company will compete on equal footing with local enterprises.

Crucially, the Czech Republic and Switzerland have a bilateral investment treaty that provides specific, negotiated protections for Swiss investors. This treaty, combined with the overarching legal framework of the European Union, creates a dual layer of security. This gives Swiss companies access to robust dispute resolution mechanisms and guarantees that may not be available to investors from other non-EU countries, offering a distinct strategic advantage.

Furthermore, the Czech koruna is fully convertible, and there are no limitations on the repatriation of profits, dividends, or royalties, aside from standard withholding tax obligations. As an international law firm operating from Prague, European Union, we provide the local expertise necessary to leverage these benefits and ensure your financial operations are seamless.

Choosing Your Corporate Structure: A Czech vs. Swiss Comparison

Selecting the right legal structure is the foundation of a successful expansion. The Czech system offers several options that will be familiar to Swiss business leaders, but with key differences in capital requirements, governance, and shareholder transparency.

The Limited Liability Company (s.r.o.) vs. the Swiss GmbH

The most popular choice for foreign investors is the limited liability company (společnost s ručením omezeným, or s.r.o.), which is analogous to the Swiss GmbH. However, the Czech s.r.o. is significantly more accessible.

• Minimum Capital: The most striking difference is the minimum share capital. A Czech s.r.o. can be established with a symbolic contribution of just CZK 1 (approximately CHF 0.04). This is a stark contrast to the CHF 20,000 required for a Swiss GmbH. While legally sufficient, a higher capital contribution is often advisable to establish credibility with local banks and partners.
• Governance: The governance of an s.r.o. is streamlined. It is managed by one or more executive directors (jednatel) and, unlike many corporate structures, does not require a mandatory supervisory board, which simplifies administration.
• Shareholder Anonymity: While a Swiss GmbH requires shareholders to be publicly listed, the Czech system offers more privacy. Shareholders are not listed in the public Commercial Register, although the ultimate beneficial owner must be recorded in a separate, non-public register to ensure transparency.

The Joint-Stock Company (a.s.) vs. the Swiss AG

For larger, capital-intensive ventures, the Czech joint-stock company (akciová společnost, or a.s.) is the equivalent of the Swiss AG (Aktiengesellschaft).

• Minimum Capital: The minimum registered capital for a Czech a.s. is CZK 2,000,000 (approximately CHF 80,000). This is comparable to, yet slightly lower than, the CHF 100,000 (with CHF 50,000 paid-in) required for a Swiss AG.
• Governance: The Czech a.s. offers flexible governance models, including a dualistic system (Board of Directors and a Supervisory Board) or a monistic system (a single Management Board), similar to the options available for a Swiss AG. This makes it a suitable vehicle for businesses planning to raise capital or requiring a more complex corporate structure.

The Branch Office (odštěpný závod)

A branch office offers the most direct route for market entry but comes with a critical legal distinction.

• Legal Status: A Czech branch is not a separate legal entity. It is a direct extension of the Swiss parent company, which means the parent company is fully and directly liable for all debts and obligations incurred by the branch in the Czech Republic.
• Advantages: The primary benefit of a branch is that it does not require a separate share capital contribution, making it a financially lean option for establishing an initial presence. All decisions, however, must be authorized by the parent firm.

FAQ – Legal tips about choosing your business structure

• Is the CZK 1 share capital for an s.r.o. really enough?
  Legally, yes. However, Swiss businesses are accustomed to higher capital signifying stability. A symbolic contribution may raise concerns with Czech banks, landlords, or suppliers. We can provide strategic advice on an appropriate capital level that balances cost-efficiency with local market credibility. For a detailed analysis of your specific needs, contact our experts at office@arws.cz.
• Can a Swiss company be the sole shareholder of a Czech s.r.o.?
  Yes, a Czech s.r.o. can be established by a single founder, which can be a foreign legal entity like a Swiss AG or GmbH. Our lawyers can draft all necessary documentation to reflect this ownership structure. Need legal help? Contact us at office@arws.cz.
• When is a branch a better option than a subsidiary?
  A branch is often suitable for activities that are closely integrated with the parent company's operations and do not require a separate legal identity or limited liability. It can be a simpler way to test the market. However, the unlimited liability is a significant risk. Get tailored legal solutions by writing to office@arws.cz.

A Step-by-Step Guide to Establishing Your Czech s.r.o.

The company formation process is straightforward when properly managed. It can be divided into two main phases: preparation in Switzerland and the incorporation process in the Czech Republic.

Phase 1: Preparation in Switzerland (Before You Arrive in Prague)

Proper document preparation is the key to a fast and smooth registration. Delays are most often caused by incorrect or improperly authenticated paperwork from the home country.

• Document Gathering: You will need to obtain official documents from Switzerland.

• For Individual Directors/Shareholders: A recent extract from the Swiss criminal register, no older than three months.
• For a Corporate Shareholder: A recent extract from the Swiss Commercial Register (Handelsregisterauszug) to prove the legal existence and representatives of the parent company.

• The Apostille Requirement: Both the Czech Republic and Switzerland are signatories to the 1961 Hague Convention. This means all official public documents issued by Swiss authorities must be authenticated with an Apostille to be legally valid in the Czech Republic. This is a critical, non-negotiable step that validates the document for international use.
• Official Translation: After the Apostille is affixed, all documents must be officially translated into Czech by a sworn translator who is registered with a Czech court.

Phase 2: The Incorporation Process in the Czech Republic

Once your authenticated and translated documents are ready, the process in Prague can proceed quickly.

1. Choose a Unique Company Name: The proposed name must be unique and not confusingly similar to any existing company in the Czech Commercial Register. A thorough check is essential to avoid having your application rejected at the final stage.
2. Secure a Registered Office (sídlo): Every Czech company must have a legal address. This requires a signed consent form from the property owner, and their signature must be officially verified. Using a virtual office service is a common and legally accepted alternative.
3. Draft Founding Documents: The company's founding articles must be executed in the form of a notarial deed before a Czech notary. For a single founder, this is a Deed of Foundation (Zakladatelská listina). For multiple founders, it is a Memorandum of Association (Společenská smlouva).
4. Obtain a Trade License (živnostenský list): Before the company can be registered, it must obtain a license for its intended business activities from the Trade Licensing Office.
5. Deposit Share Capital: The process for depositing share capital has been simplified. For contributions below CZK 20,000, a written declaration from the founder is sufficient. For amounts exceeding this, the capital must be deposited into a special temporary bank account.
6. Register in the Commercial Register (Obchodní rejstřík): This is the final step that officially establishes the company as a legal entity. A key advantage of the Czech system is that a notary can often perform a direct and immediate registration into the Commercial Register, making it the fastest method available.
   

Risks and Penalties	How ARROWS Helps
Incorrect Documentation: Rejection of your application by the Commercial Register due to expired criminal records, missing Apostilles, or improper translations, causing weeks of delays and additional costs.	Document Preparation and Review: We manage the entire documentation process, ensuring every paper is correctly authenticated, translated, and compliant before submission. Need legal help? Contact us at office@arws.cz.
Company Name Conflict: Choosing a name too similar to an existing company, leading to application rejection after all other steps are completed and fees are paid.	Legal Analysis: We conduct a thorough search of the Commercial Register and advise on a unique, compliant name from the very beginning to prevent costly setbacks. Get tailored legal solutions by writing to office@arws.cz.
Procedural Delays: Navigating multiple authorities (notary, Trade Office, Commercial Register) without local knowledge can turn a weeks-long process into months.	Representation before Public Authorities: Our lawyers handle all communications and filings on your behalf, leveraging direct notary registration to establish your company in a matter of days. For immediate assistance, write to us at office@arws.cz.

Establishing a Czech Branch: The Direct Route

For Swiss companies seeking a more direct presence without creating a new legal entity, establishing a branch is an effective option. The process involves registering an extension of your existing Swiss company in the Czech Republic.

The key steps include a formal decision by the Swiss parent company's board to establish the branch, the appointment of a Head of Branch to act as its representative in the Czech Republic, and the preparation of apostilled and translated documents from the parent company, such as its Certificate of Incorporation. The branch must then be officially registered in the Czech Commercial Register to commence operations.

Our firm's extensive experience, supported by the ARROWS International network built over 10 years, makes us ideally suited to manage the complexities of cross-border branch establishments, ensuring full compliance for your Swiss headquarters.

Post-Registration: Your Ongoing Compliance Obligations

Incorporating your company is just the beginning. The Czech Republic has several mandatory post-registration duties that are critical for maintaining good legal standing and avoiding significant penalties.

• Tax Registrations: Within 15 days of its entry in the Commercial Register, your new company must register with the local Financial Office for corporate income tax. If the company's annual turnover is expected to exceed CZK 2 million, it must also register for Value Added Tax (VAT).
• Social Security and Health Insurance: If the company employs any staff, including a director who receives a salary, it must register with the Czech Social Security Administration and a designated health insurance company within eight days.
• Register of Beneficial Owners (UBO): This is a critical compliance requirement. All Czech companies must identify and register their ultimate beneficial owner(s) in a central register. This differs from the Swiss system, where UBO information is typically maintained internally.
• Data Mailbox (Datová schránka): Upon formation, every company is assigned a mandatory electronic "Data Mailbox." This is the official channel for all communication with Czech public authorities, including the tax office and courts.

Risks and Penalties	How ARROWS Helps
Failure to Register Beneficial Owner: Fines up to CZK 500,000. Crucially, the company is legally barred from paying out profits or dividends to shareholders until compliance is met.	Legal Opinions & Compliance: We handle the complete registration in the Register of Beneficial Owners and provide ongoing legal consultations to ensure your data is always current. Do not hesitate to contact our firm – office@arws.cz.
Missed Tax Registration Deadlines: Financial penalties from the Tax Office for late registration for corporate income tax or VAT.	Drafting Legally Required Documentation: We manage all post-registration filings with the authorities, ensuring you meet every deadline and avoid unnecessary fines from the start. Our lawyers are ready to assist you – email us at office@arws.cz.
Incorrect Employment Filings: Fines from the Social Security and Health Insurance authorities for failing to register the company or its employees on time.	Preparation of Internal Company Policies: We draft compliant employment contracts and internal policies and manage all necessary registrations, protecting you from labor law violations. Want to understand your legal options? Email us at office@arws.cz.

Navigating the Czech Legal Landscape with ARROWS

Successfully entering the Czech market requires navigating unfamiliar administrative hurdles, from authenticating Swiss documents with an Apostille to meeting strict post-registration compliance deadlines. Missteps can lead to costly delays and penalties.

Contact our experts:

As a leading Czech law firm in Prague, EU, with over a decade of experience building our ARROWS International network, we specialize in making this process seamless for Swiss businesses. We support over 250 limited liability companies and operate in 90 countries, giving us unparalleled insight into cross-border challenges. Our team provides comprehensive support, including:

• Full company and branch formation services.
• Drafting and review of all necessary documentation (Společenská smlouva, contracts, internal policies).
• Representation in court or before public authorities (Commercial Register, Tax Office).
• Ongoing legal consultations to ensure full compliance.
• Professional training for management on Czech director duties.

To ensure your entry into the Czech market is efficient, compliant, and successful from day one, contact our team of experts for a consultation. Email us at office@arws.cz to get started.

FAQ – Most common legal questions about setting up a company in the Czech Republic

• How long does it typically take to set up an s.r.o. in the Czech Republic?
  While the process can take weeks or even months if you navigate it alone, our expertise and use of direct notary registration can complete the entire incorporation in just a few days once all necessary documents are prepared. For immediate assistance, write to us at office@arws.cz.

• Do I need to be physically present in Prague to register my company?
  No. The entire process, from the notary appointment to filings with the authorities, can be handled by our lawyers on your behalf through a power of attorney, allowing you to manage the setup remotely from Switzerland. To start your company registration remotely, email our team at office@arws.cz.

• What are the main taxes my new Czech company will have to pay?
  The primary taxes are a flat corporate income tax of 21% on profits and a standard Value Added Tax (VAT) of 21% on most goods and services, with reduced rates for certain items. For personalized advice on your tax situation, write to us at office@arws.cz.

• Are there any restrictions on foreign directors or shareholders for a Czech company?
  No, there are no residency requirements for directors or shareholders. Foreign individuals and companies from Switzerland can freely own and manage a Czech company. The only key requirement is that directors must provide a clean criminal record from their home country. To confirm your eligibility, get in touch with our legal experts at office@arws.cz.

• What is the 'duty of due managerial care' for a director in the Czech Republic?
  This is a proactive legal standard (péče řádného hospodáře) requiring a director to act with loyalty, diligence, and the necessary knowledge in all decisions. A breach can lead to personal liability for damages caused to the company, a stricter standard than in some other jurisdictions. We offer professional training for management on these duties. For more information, please contact office@arws.cz.

• How does the Czech-Swiss double taxation treaty benefit my business?
  The treaty prevents the same income from being taxed in both countries. It allocates taxing rights and can significantly reduce or eliminate withholding taxes on cross-border payments like dividends, interest, and royalties, which is essential for optimizing your international tax structure. To understand how the treaty applies to your business model, our lawyers are ready to assist you – email us at office@arws.cz.

Don't want to deal with this problem yourself? More than 2,000 clients trust us, and we have been named Law Firm of the Year 2024. Take a look HERE at our references.