Expanding into a new market is one of the key milestones in a company’s development, requiring a thorough analysis of the economic and legal conditions in the target country. In this context, Poland and the Czech Republic are often popular destinations for business expansion.
Poniższa tabela porównawcza w przejrzysty sposób przedstawia najważniejsze aspekty związane zarówno z prowadzeniem oddziału,
jak i spółki z o.o. z uwzględnieniem specyfiki rynku polskiego i czeskiego.
x
POLAND
CZECH REPUBLIC
Branch of the Company
Established pursuant to an internal act of the foreign (parent) company headquarter (a resolution of the management board or shareholders).
Acts on behalf of and for the benefit of the parent company.
Subject to disclosure in the National Court Register (KRS).
Established pursuant to an internal act of the foreign (parent) company headquarter (a resolution of the management board or shareholders).
Acts on behalf of and for the benefit of the parent company.
Subject to registration in the Czech Commercial Register (obchodní rejstřík).
Limited Liability Company
It is a separate legal entity established by a notarized Articles of Association.
It has its own assets and a distinct organizational structure.
It must be registered with the National Court Register (KRS).
It is a separate legal entity established by Memorandum or Articles of Association either by a notary or by the competent registry court.
It has its own assets and a distinct organizational structure.
It must be registered with the Czech Commercial Register (obchodní rejstřík).
x
POLAND
CZECH REPUBLIC
Branch of the Company
It does not have its own separate governing bodies.
The branch is managed by a representative appointed by the parent company.
It does not have its own separate governing bodies.
The branch is managed by the head of the branch (vedoucí odštěpného závodu) appointed by the parent company.
Limited Liability Company
It has a statutory structure of governing bodies, namely a management board (zarząd), a shareholders’ meeting (zgromadzenie wspólników), and, optionally, a supervisory board (rada nadzorcza) or an audit committee (komisja rewizyjna).
It has a statutory structure of governing bodies, namely one or more managing directors (jednatel), a general meeting of shareholders (valná hromada), and optionally a supervisory board (dozorčí rada).
x
POLAND
CZECH REPUBLIC
Branch of the Company
The parent company is liable for the obligations arising from the branch’s operations with all of its assets.
The parent company is fully liable for the obligations arising from the branch’s operations with all of its assets.
Limited Liability Company
A limited liability company is liable for its obligations with all of its assets.
The shareholders are liable for the company’s obligations only up to the amount of their unpaid capital contributions registered in the Commercial Register.
Members of the management board (członkowie zarządu) are personally and jointly liable for the company’s obligations if enforcement against the company proves unsuccessful.
A limited liability company is liable for its obligations with all of its assets.
The shareholders are liable for the company’s obligations only up to the amount of their unpaid capital contributions registered in the Commercial Register.
Executives (jednatelé) are liable if they breach their duty of acting with due care.
x
POLAND
CZECH REPUBLIC
Branch of the Company
The scope of business activities is the same as that of the parent company.
The scope of business activities is generally the same as that of the parent company, subject to obtaining the relevant trade licenses in the Czech Republic.
Limited Liability Company
The scope of business activities may be chosen freely, in accordance with the PKD (Polish Classification of Economic Activities), as determined at the time the company is established.
The scope of business activities may be chosen freely, provided the company obtains the appropriate trade licenses (živnostenské oprávnění) before registration.
x
POLAND
CZECH REPUBLIC
Branch of the Company
Bookkeeping under Polish accounting standards, reporting for CIT and VAT* purposes, and filing annual financial statements.
*There are differences in interpretation among tax authorities as to whether the branch, the parent company, or both entities should register as taxpayers.
Bookkeeping under Czech accounting standards, reporting for CIT and VAT purposes, and filing annual financial statements.
Limited Liability Company
Bookkeeping under Polish accounting standards, reporting for CIT and VAT purposes, and filing annual financial statements.
Bookkeeping under Czech accounting standards, reporting for CIT and VAT purposes, and filing annual financial statements.
x
POLAND
CZECH REPUBLIC
Branch of the Company
It is subject to corporate income tax (CIT) on income generated in Poland at a rate of 19% (or 9% for small taxpayers who meet the eligibility criteria) and is registered as a VAT taxpayer*
*The exact scope of VAT obligations and the applicable tax rate depend on the nature of the business.
It is subject to corporate income tax on income generated in the Czech Republic at a standard rate of 21%.
It must register as a VAT taxpayer if mandatory turnover thresholds or other conditions are met, or it can register voluntarily.
Limited Liability Company
The income of a limited liability company is subject to a 19% Polish corporate income tax (or 9% for small taxpayers who meet the eligibility criteria).
It is required to register as a VAT taxpayer *.
*The exact scope of VAT obligations and the applicable tax rate depend on the nature of the business.
The income of a limited liability company is subject to a 21% Czech corporate income tax rate.
It is required to register as a VAT taxpayer if mandatory turnover thresholds or other conditions are met, or it can register voluntarily.
The information provided above offers a brief overview of the differences between a branch and a limited liability company (sp. z o.o./s.r.o.), both in the context of Poland and the Czech Republic.
If you’d like to learn more and choose the best solution for your business, we encourage you to contact us—our experts will be happy to help you select a strategy and guide you through all the formalities involved in expanding your business in Poland or the Czech Republic.
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