Subsidiary vs. Branch in Croatia - Updated for 2021
Subsidiary vs. Branch in CroatiaUpdated on Sunday 04th April 2021
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Foreign companies have several opportunities for doing business in Croatia. Among them, one can establish a branch or a subsidiary, the later one being recognized as a separate legal entity. The legal aspects of how these business forms can be registered in Croatia can be entirely explained by our Croatian lawyers. Our team of advisors is at your disposal with legal support regardless of the chosen form of company in Croatia, in respect with the Commercial Code and the Companies Act and the modifications added in 2021.
The attributes of a branch and a subsidiary in Croatia
A branch in Croatia can be established by the parent company willing to operate in this country under this type of entity. Complete liability of a branch is a matter of the parent company, which is why this business form is not considered a legal entity. As for a subsidiary in Croatia, this is considered a legal entity with full liability in the chosen territory for business, and furthermore, the taxes on profits will only be paid in the home country of the parent company.
Steps in registering a branch in Croatia in 2021
A branch is registered in Croatia in 2021 with all the features and the attributes of the parent company, meaning that it will activate under the same name, trademarks, and rules. One should bear in mind that for establishing a branch in Croatia, a local individual or another company must be appointed as the legal representative. When opening a branch in Croatia, several documents must be submitted to the Croatian Chamber of Commerce and the Trade Register, such as:
- the Articles of Association of the parent company with details about the owners, share capital and the activities;
- the business domicile of the foreign branch in Croatia;
- the name of the legal representative;
- the balance sheets of the parent company for the previous business year;
From a legal point of view, these documents must be notarized and translated in the Croatian language. It is suggested to avoid the language barrier and related issues and complete the registration procedure with complete assistance offered by our attorneys in Croatia.
Steps in opening a subsidiary in Croatia
In Croatia, there are two types of subsidiaries available on the market: the public one which can be set up with a minimum share capital of HRK 200,000 and the private one which can operate if a minimum share capital of HRK 20,000 is provided in a Croatian bank account. Even though it is considered a separate legal entity with liability on the capital contribution, a subsidiary in Croatia must respect the purposes of the parent company. The following documents are necessary when registering a subsidiary in Croatia:
- the notarized Articles of Association;
- details about the business address, the shareholders and the legal representative in Croatia;
- banks statements providing the deposited minimum share capital.
Just like all companies in Croatia, the subsidiary will have a certificate of registration, the company’s seal, a statistical number, and will have to register for tax purposes. The entire procedure will take a few days, but it is recommended to ask for support and legal advice in this sense. Our advisors are at your disposal with everything you need and can explain the provisions of the Commercial Law which stand at the base of forming companies in Croatia in 2021.
The advantages of branches in Croatia
Most branches in Croatia activate in the banking system but are not limited to this. The benefit of establishing branches is that such entity can develop rapidly and can have a wide range of activities. Likewise, the losses can be counterbalanced by the profits registered by other similar branches. The revenues of a branch can be invested or can be transferred to other branches which can make use of such profits.
The advantages of subsidiaries in Croatia
Subsidiaries in Croatia can benefit from several tax incentives and can direct the taxes on profits only to the country where the parent company is established. Minimized taxes on dividends are also the advantages related to a subsidiary in Croatia. The registration of these entities in 2021 can be discussed with our specialists.
If you want to know more about branches and subsidiaries in Croatia, and the legal terms involved, please feel free to contact our Croatian law firm.