How Polish Companies Can Set Up a Business and Bank Account in the Czech Republic

9.12.2025

Expanding from Poland to the Czech Republic offers strategic growth but hides legal traps like unlimited liability in branch offices or banking rejections due to strict AML compliance. ARROWS, a leading Czech law firm based in Prague, European Union, guides Polish investors through these complexities daily. We secure your market entry by mitigating risks that standard consultants often overlook.

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.

Structuring Your Entry: Subsidiary vs. Branch

For Polish Spółka z o.o. executives, the first decision is often the most critical: should you open a Branch Office (odštěpný závod) or a separate Czech Limited Liability Company (s.r.o.)? While a branch seems easier administratively, it creates a direct liability tunnel to your Polish headquarters.

The Branch Office Trap

A branch is not a separate legal entity. It is merely an organizational unit of your Polish company. This means your Polish parent company retains full, unlimited liability for all debts, fines, and lawsuits incurred by the Czech branch. If your Czech operations face a lawsuit or tax penalty, creditors can seize assets directly from your accounts in Poland.

The Safe Harbor: Czech s.r.o.

The s.r.o. creates a "corporate veil." The liability of the Polish parent is limited to the amount of unpaid registered capital. Once capital is paid, your Polish assets are generally shielded from Czech risks. ARROWS strongly recommends this structure for any operational business to ring-fence liability.

Choosing the Wrong Structure

Risks and penalties	How ARROWS helps (office@arws.cz)
Unlimited Liability: Using a Branch structure exposes the Polish parent company's assets to seizure by Czech creditors.	Corporate Structuring: We analyze your business model and incorporate a Czech s.r.o. to isolate risk.
Contractual Distrust: Czech partners may refuse to sign contracts with a foreign branch due to enforcement fears.	Credibility Strategy: We establish a local legal entity that signals permanence and reliability to suppliers.
Tax Complications: A branch creates a "Permanent Establishment" with complex profit attribution rules, risking double taxation audits.	Tax & Legal Setup: We coordinate with tax advisors to structure your entity for clarity under the PL-CZ Double Tax Treaty.

The Capitalization Myth: Why 1 CZK is Dangerous

Czech law allows you to form an s.r.o. with just 1 CZK (approx. 0.19 PLN) of capital. While legal, this is a practical trap for foreign investors.

Why you should avoid 1 CZK capital:

Banking Red Flags: Banks view 1 CZK companies as shell entities or SPVs. This triggers high-risk AML alerts and often leads to account rejection.
Insolvency Risk: With only 1 CZK, the first invoice for office rent or legal fees technically pushes the company into insolvency (liabilities exceed assets). This imposes a statutory duty on the Jednatel (director) to file for insolvency immediately or face personal liability.

Recommendation: We advise a minimum capital of CZK 20,000 to CZK 50,000. This demonstrates substance to banks and partners without locking up significant cash.

FAQ – Legal tips about Capital & Structure

Can I pay the share capital in cash?
Yes, if the capital is up to CZK 20,000, you can deposit it with the custodian of contributions (usually the founder) or the notary. This avoids the "chicken and egg" problem of needing a bank account to form the company. Need help with capital custody? Contact us at office@arws.cz.
Does the Czech s.r.o. need a supervisory board?
No, unlike a Polish S.A. or larger Sp. z o.o., a mandatory supervisory board is rare for Czech SMEs. This simplifies governance and reduces costs. For a governance review, write to office@arws.cz.
Can a Polish company be the sole shareholder?
Yes, a single-member s.r.o. is fully legal. However, a chain of single-member companies (a Polish single-member company owning a Czech single-member company) can be restricted. Check your chain of ownership by emailing office@arws.cz.

The Banking Fortress: Opening an Account

Opening a corporate bank account is currently the hardest part of market entry. Due to strict AML/KYC regulations, Czech banks are extremely suspicious of foreign ownership structures.

The Advantage of PKO BP Czech Branch

For Polish companies, the Prague branch of PKO BP is a strategic bridge.

Language: They accept documents in Polish and speak Polish, saving thousands on sworn translations.
Systems: They use the familiar iPKO biznes platform, allowing your Polish finance team to manage Czech accounts seamlessly.
Speed: Transfers between PL and CZ entities within PKO are instant.

The "Apostille" Problem

Despite the 1987 Legal Assistance Treaty between Poland and the Czech Republic, which theoretically exempts documents from legalization, many bank compliance departments still demand an Apostille on Polish KRS extracts.11 Arguing with a bank officer about international treaties usually results in rejection. ARROWS prepares the full "Apostille + Sworn Translation" package to ensure your application passes compliance the first time.

Banking and Financial Compliance

Risks and penalties	How ARROWS helps (office@arws.cz)
Account Rejection: Banks reject applications due to "unclear ownership" or "lack of local substance" (e.g., virtual office).	Bank Dossier Preparation: We prepare a compliance package proving your economic substance in CZ.
Frozen Funds: Failure to update KYC data can lead to sudden freezing of operational accounts.	Ongoing Corporate Secretarial: We monitor compliance deadlines to keep your company in good standing with banks.
Transfer Pricing: Intra-group loans or service fees between PL and CZ entities are scrutinized by tax authorities.	Intercompany Contracts: We draft loan and service agreements that meet "arm's length" requirements.

Management: The Jednatel vs. Zarząd

In a Czech s.r.o., the executive body is the Jednatel. Unlike the Polish Zarząd, the Jednatel often has individual signatory power by default.

Key Differences:

Liability: The Jednatel must act with "due managerial care" (péče řádného hospodáře). A breach leads to unlimited personal liability for damages.
Residency: A Polish citizen living in Warsaw can be the Jednatel. No Czech residency is required.
Criminal Record: You must provide a clean criminal record extract (Zaświadczenie o niekaralności) to be appointed.

FAQ – Legal tips about Directors (Jednatelé)

Can I employ the Jednatel under a labor contract?
Be careful. A "Contract on Performance of Function" (Smlouva o výkonu funkce) is the standard. A parallel labor contract for the same duties is invalid (concurrence of functions). Draft a valid management contract via office@arws.cz.
Do I need to travel to Prague to be appointed?
Not necessarily. You can be appointed via a Power of Attorney for the General Meeting. However, you will likely need to visit for the bank account opening. Arrange a remote appointment by writing to office@arws.cz.
Is the Jednatel responsible for the company's debts?
Generally no, but if the Jednatel fails to file for insolvency when the company is broke, they become personally liable to creditors for the shortfall. Protect yourself with legal advice from office@arws.cz.

The UBO Register: A Hidden Minefield

The Czech Register of Beneficial Owners imposes strict transparency rules. You must identify the specific individuals who own >25% of the Polish parent company.

The Trap: If you fail to register the UBOs in the Czech system:

Fine: Up to CZK 500,000 (approx. PLN 90,000).
Dividend Ban: The company cannot pay dividends to a shareholder with unregistered UBOs.
Voting Freeze: The Polish parent company cannot exercise voting rights at the Czech General Meeting.

ARROWS ensures your UBO registration is handled immediately upon incorporation to prevent these blocking sanctions.

Regulatory & Administrative Risks

Risks and penalties	How ARROWS helps (office@arws.cz)
UBO Sanctions: Fines up to 500k CZK and ban on dividends for non-registration.	UBO Registration: We map your structure and register the correct UBOs to ensure dividend flow.
Data Box Negligence: Ignoring the mandatory Datová schránka leads to automatic loss of court cases (fiction of delivery).	Data Box Monitoring: We can monitor your official mailbox and alert you to state notices immediately.
Trade License Fines: Operating without the correct trade license usually carries a fine up to 500k CZK.	Licensing Support: We identify the correct trade codes for your business activities and handle the Trade Office filing.

Entering the Czech market is a logical step for Polish firms, but it is not a "copy-paste" of Polish operations. The risks of 1 CZK capitalization, banking rejection, and UBO non-compliance are real and can stall your expansion for months.

ARROWS handles this agenda daily. We are an international law firm operating from Prague, European Union, insured for CZK 500 million. We bridge the gap between Polish ambition and Czech regulation. Don't risk your capital on a guess. For immediate assistance, write to us at office@arws.cz.

FAQ – Most common legal questions about Czech expansion

1. How long does it take to set up a Czech s.r.o.?

If all documents (especially the Polish extracts) are prepared correctly, we can use "direct entry" by a notary to register the company in 3 to 5 days. However, gathering and apostilling documents usually takes 1-2 weeks prior to this. Need a fast track? Contact us at office@arws.cz.

2. Is a virtual office in Prague safe?

It is legal, but risky for VAT registration. The Tax Office often checks if you have real substance (employees, desk space). If they find just a mailbox, they may deny your VAT number. We recommend a "premium" virtual office with meeting rooms and reception. We can recommend verified providers – email office@arws.cz.

3. When must I register for VAT in the Czech Republic?

Mandatory registration starts at CZK 2,000,000 turnover in 12 consecutive months (approx. PLN 340,000). This is higher than in Poland, allowing you to operate VAT-free for longer. You can also register voluntarily, but must prove economic activity. Get tax registration support by writing to office@arws.cz.

4. Can ARROWS represent us in communication with the Polish PKO BP branch?

Yes. Our team communicates fluently in Polish and English and deals with bank compliance departments regularly to push applications through. Our lawyers are ready to assist you – email us at office@arws.cz.

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