Branch office

What it means

A branch office is the registered Slovak establishment of a foreign company. It has no legal personality of its own: the foreign company signs the contracts and the branch is part of it.

Even so it is entered in the commercial register, has a head of branch, an ID number and registers for tax. To the authorities it operates much like a separate company.

A Slovak company can have a registered organisational unit too, such as a branch away from its registered office. That unit is not a separate taxpayer and its figures form part of the company’s books; separate obligations arise mainly for the branch of a foreign person.

How it works in practice

The branch keeps books under Slovak rules and prepares financial statements for its activity. It employs people, pays contributions and handles permits for third-country staff.

For tax, the question is whether a permanent establishment arises. Usually it does, and Slovakia then taxes the profit attributable to the branch, not the foreign company’s entire profit.

Payments between the branch and the foreign head office are not contracts between two companies, since they are one person. For income tax, though, the branch’s profit is set as if it were independent, so the allocation of head-office costs is backed by transfer pricing documentation.

What to watch out for

A branch and a subsidiary get confused. A branch’s obligations reach the whole foreign company, while a subsidiary risks only its contribution, and that choice belongs before market entry rather than after.

A branch that has stopped trading but was never struck off the register keeps every obligation: filing returns, lodging statements and answering notices. Penalties for missing filings then land in an official e-mailbox that nobody reads any more.