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Establish a Branch in Slovakia

Updated on Wednesday 06th May 2020

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Registering a branch in Slovakia is a decision taken especially by the foreign companies willing to check the Slovak market before opening a limited liability company or a public limited liability company. Foreign investors interested in starting a business in Slovakia are advised to seek advice from a local company formation firm, who can provide them with personalized business consultancy

The representatives of foreign companies can rely on our Slovak company formation specialists if they want to set up a branch office here.

Foreign companies operating in Slovakia

Under the Company Law, foreign companies can set up three types of legal entities: the subsidiary, which will operate under the Slovak legislation entirely, the branch office which must respect the legislation in Slovakia and the parent company’s country of origin, and the liaison office which is not permitted to complete commercial activities.

Out of all these entities, the branch office offers the highest degree of control to the parent company.  A Slovak branch office is not allowed to complete any other activities than those of the parent company’s. Also, the foreign company will hold all management decisions in respect to the operation of the branch office in Slovakia.

If you want to open a company in Slovakia, you can ask for recommendations from our consultants who can provides you with detailed information.

Particularities of branch offices in Slovakia

A branch established in Slovakia is not considered a legal entity and the foreign company is entirely responsible for its actions.

The Slovak branch office must present every year the balance sheet and the statements on losses and profits of the foreign parent company. Also, it must keep its own statements of account and deposit it every year, like a regular local company.

Usually a trade permit must be received before starting certain types of business by the local companies but also by the branches. The license may be a free trade license, conditional trade licenses or trade certificates (for business which requires a higher degree of performance).

The trade licenses of certificates are received from the one stop shop after paying a fee and are release in maximum one month.

It is mandatory for the branches opened in Slovakia to apply with the relevant documents at the one stop shop before beginning any activities. A registration fee must also be paid.

Requirements for setting up a branch office in Slovakia

Even if it is a rather simple business form, there are still specific requirements which must be respected upon the creation of a branch in Slovakia. The following aspects must be considered when setting up a branch office in this country:

  1. the branch office can be registered by a single foreign entity, therefore, it is not permitted for two companies to join their efforts in a branch office;
  2. it is a mandatory requirement for the branch office to have a registered address in Slovakia;
  3. the branch must have at least one director who is a natural person and who is a resident of an EU country;
  4. in case the director is from a non-EU country, he or she must obtain a Slovak residence permit;
  5. there are no share capital requirements imposed on the foreign company for the creation of a branch office;
  6. the parent company will bear all the liability for the Slovak branch office’s debts and obligations;
  7. all companies in Slovakia, including branch offices are required to have e-mail addresses starting with 2017.

With respect to the last point in the enumeration, it is important to know that the e-mail address will be used by the Slovak Tax Office for official communication purposes. Also, only EU or Slovak resident directors have the right to use the company’s e-mail address for communicating with the local authorities.

You can obtain more information on these requirements from our company registration agents in Slovakia.

We also invite you to see the scheme below:

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Registration of a branch in Slovakia

An advantage of opening a branch in Slovakia is that there are no requirements for a subscribed share capital at registration.

The specific documentation at registration is more complex that the one of a regular form of business. The branch must register information about the foreign company (name, address, proof of existence in the foreign country, certificate of registration, certificate of incorporation, the name of the directors and secretary, the articles of association) and information regarding the branch (the decision of opening a branch in Slovakia, the name and address, the representative vested by the power of attorney by the foreign company).

The above must be notarized in the country of origin and must be accompanied by an official Slovak translation.

The result of registration is releasing the registration certificate and the registration for the health insurance and the income tax.

The next step in setting up a subsidiary in Slovakia is opening a bank account for the future financial actions and the registration at the District Court.

The last step of registration consists in registering for sickness insurance, sickness insurance and disability insurance at the local insurance company.

Taxation of branch offices in Slovakia

Compared to the subsidiary, which will be treated as any other local company because it can take the form of a limited liability company, the branch office will only be taxed on the income generated in Slovakia.

The corporate tax in Slovakia is imposed at a flat rate of 21% and applies to all the profits earned by the branch office.  Other taxes which need to be considered by branch offices in Slovakia are the withholding taxes which are levied at a rate of 19% on incomes, such as interests and capital gains. Starting with 2017, Slovakia has abolished the dividend tax for corporate shareholders.

Another tax which must be taken into account by Slovak branches is the value added tax which has a standard rate of 20%.

We also offer tailored accounting services, should you or your company need such services in Slovakia. We can also help you obtain an EORI number in Slovakia.

Why open a branch office in Slovakia?

Most of the times, foreign companies must decide between setting up subsidiaries or branch offices in Slovakia. The decision can be hard, given that both entities offer advantages, however, the branch office:

  • - offers total control to the parent company over the branch office registered in Slovakia;
  • - the registration costs of a branch office are significantly lower compared to those of a subsidiary;
  • - the branch office can take advantage from Slovakia’s double taxation agreements;
  • - the licensing requirements are less stringent when setting up a Slovak branch office;
  • - the annual maintenance costs are lower in the case of a branch office than in those of a subsidiary.

Apart from these, foreign investors are encouraged to register companies in Slovakia under any forms, as the government provides various grants and subsidies. As a result, foreign direct investments (FDI) in Slovakia:

  • - have had a value of 475 million USD at the level of 2018;
  • - in the same year, the total FDI stock held by Slovakia was 57 billion USD;
  • - the value of FDI in Slovakia represented 53.6% of its Gross Domestic Product in 2018;
  • - Slovakia ranks 42nd  out of the total 190 countries in the World Bank’s 2019 Doing Business Report.

The entire registration procedure of a branch office in Slovakia takes from a couple of days to one month, depending on the necessary type of trade license. Our team of company formation experts in Slovakia can help you establish a branch in this country or any other business form you are interested in. For complete guidance in company formation matters, please contact our specialists in Slovakia


 

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Call us now at +421948899236 to set up an appointment with our consultants, who are handling company formation in Slovakia. Alternatively you can incorporate your company without traveling to Slovakia.

As our client, you will benefit from the joint expertize of local accountants and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Slovakia.

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