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Subsidiary vs. Branch in Slovakia

Subsidiary vs. Branch in Slovakia

Updated on Wednesday 24th August 2016

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Subsidiary-vs-Branch-in-Slovakia.jpgForeign investors in Slovakia have two options for setting up their business in the country. The choice between a subsidiary or a branch depends on the size of the company, its budget to enter the Slovakian market and the desired scope of the activities that will be performed in the country.
 
The main difference between a branch and a subsidiary is that the first is not a separate legal entity from the foreign company. The legal requirements for doing business are largely the same, although the branch has lighter reporting requirements. Our Slovak lawyers can give you detailed information about the particularities of each business type and can help you choose the best-suited one.
 
Here is a simple scheme created by our lawyers in Slovakia about the two options available for expanding a foreign business in Slovakia and about the main differences between branches and subsidiaries.
Subsidiary-vs-branch-in-Slovakia.png
 

The branch in Slovakia

 
The branch office in Slovakia will be an extension of the mother company abroad. It acts on behalf of the original company, it is founded by it and the foreign corporation is liable for all the debts and liabilities of its Slovakian branch.
 
In order to operate in the country, the branch will need to be registered with the Slovakian Commercial Register. An individual will act as the branch representative in the country. He is commonly referred to as the branch manager and will also have to be registered with the Commercial Register in order to act on his behalf, not only on the behalf of the company while doing business in the country.
 
The advantages of the branch include no requirements for a minimum share capital, a faster registration procedure, and less operational costs.
 

The subsidiary in Slovakia

 
The subsidiary is a newly formed Slovak company, one that will be independent of its parent foreign company and one that will be able to perform additional commercial activities apart from the ones the foreign company is registered to perform.
 
The subsidiary can be registered as:
- a limited liability company,
- a joint-stock company,
- general or limited partnership.
 
The limited liability company is the most popular business form because of its lower share capital requirements and less stringent reporting and corporate governance requirements. Any chosen type of company must be registered with the Commercial Register no later than 90 days after it has been established. The minimum share capital will depend on the type of company and it is larger in the case of joint-stock companies.
 
The main advantage of the subsidiary is that the parent company is in no way liable for the actions of its Slovak counterpart.
 
You can contact our lawyers in Slovakia for more detailed information about the company registration procedure as well as legal assistance and representation for business owners in the country.
 
 

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