When opening a company in the Czech Republic
, the investors will have to handle a set of procedures which are customarily imposed in this case. Our local specialists in company formation
can assist in the whole process of company incorporation in Czech Republic
, helping with drafting the constitutive documents, hiring a local accountant, offering a registered office for the
newly formed company and numerous other relevant matters.
What are the main legal entities that can be set up in the Czech Republic?
The legislation available in Czech Republic provides a set of legal entities
, similar with the ones available at the level of the European Union (EU). When starting the procedure of company formation in Czech Republic
, it is necessary to know the advantages of each business form.
provides the following types of companies:
- • limited partnership – incorporated by at least two partners, in which one assumes unlimited liability, while the other has limited liability for the company’s debts;
- • general commercial partnership – this business form can be set up by minimum two partners, who can be natural persons or legal entities;
- • branch office – set up by a local or foreign company and which acts as a commercial representation of that company;
- • limited liability company (SRO) – it represents the most popular business form incorporated in Czech Republic and it needs a capital of CZK 1;
- • joint stock company (AS) – it can be set up as private or public company and the company’s capital will depend on this aspect (a private joint stock company will require a capital of CZK 2 million, while the public company will require CZK 20 million for incorporation);
- • cooperative – incorporated by at least five natural persons; the business form can also be set up by legal entities and, in this case, at least two entities are needed;
- • European joint stock company, also known as Societas Europaea, can be set up in Czech Republic under the Council Regulation (EC) No. 2157/2001.
Why set up a Czech limited liability company?
The Czech limited liability company
(Spolecnost s Rucenim Omezenym-SRO) is usually preferred for small and medium sized businesses and it is a
popular legal entity, due to its requirements. It can be established either by one founder (person or legal entity) or by an association of maximum 50 persons. An SRO with a
single shareholder can’t set up or be the sole shareholder of another
SRO. At the same time, one individual can be the
sole shareholder of only
limited liability companies.
Why start a joint stock company in Czech Republic?
Setting up a joint stock company (Akciova Spolecnost-AS) requires at least two shareholders
one corporate body, a managing board which is controlled by a supervisory council and must have a local address. There is also a demand for a higher minimum share capital - CZK 2 million (in the case of a
private joint stock company) - and this is the reason why it is generally chosen by large companies. In case the company is set up through a
public offer of shares, the capital required is CZK 20 million.
Steps for company formation in the Czech Republic
Some of the basic steps for opening a company in the Czech Republic are presented below, and our team of specialists can provide legal advice on each of the following:
- choose the most appropriate business form for conducting a business activity in the Czech Republic (the most popular legal entities are represented by limited liability companies and joint stock companies);
- provide four options for the proposed company name and open a corporate bank account;
- prepare the company’s statutory documents, the memorandum of association and the notarial deed;
- notarize the Czech company’s documents in front of a public notary in the Czech Republic;
- once the company’s documents are signed and notarized, the company’s representatives have to register the legal entity with the Commercial Register;
- in order to register with the Commercial Register, it is necessary to fill in a special form with the Register Court, the entity which administers the Czech Commercial Register;
- it is also possible to register with the Commercial Register through the public notary.
How can a foreign company enter the Czech market?
The Czech branch
, subsidiary or representative office are business forms that are usually
incorporated in the Czech Republic
by foreign companies and they can be set up as separate entities from the parent company (subsidiary) or
extensions of the
parent-company opened in
Czech Republic (as it is the case of the branch office).
Costs for company formation in the Czech Republic
The registration of a local business implies the following company formation costs in the Czech Republic:
- registration fee: the basic registration fee concluded through a public notary in the Czech Republic is of CZK 2,000 (or EUR 75) for a limited liability company, while in the case of the registration through the Register Court, the fee can increase to approximately CZK 6,000;
- virtual office cost: approximately EUR 33/month; the virtual office represents the most suitable option for establishing a business address in this country;
- minimum share capital costs: in the case of a limited liability company, the minimum capital required is of CZK 1;
- company formation fee: approximately EUR 589, an advantageous offer when starting a business here;
- accounting costs: it includes bookkeeping services and tax assistance and the cost starts from EUR 50/month.
What are the main requirements for company formation in Czech Republic?
The company set up in Czech Republic has to be registered with the Trade License Office
and this is a compulsory requirement for company formation in Czech Republic.
To obtain the
trade license, the following documents are required when starting a company in Czech Republic
- • the statutory document for companies that have not yet been registered with the Commercial Register;
- • the excerpt from the Register – this is applicable for companies that have already been established;
- • the lease agreement of the office space, which shows that the company has an official business address;
- • the payment proof of the administrative fee, imposed to all companies requiring this service.
In no more than 90 days since the company was set up or the trade license was released, the businessmen must register with the Commercial Register of the Regional Commercial Court. Along with the standard application for company formation in Czech Republic, the founders must submit:
- • the articles of association – the main statutory documents of a business set up in Czech Republic;
- • documents attesting the right to develop business activities on the Czech Republic territory;
- • confirmation from the administrator of the registered capital and an extract from the Trade Licenses Register;
- • a certificate from the bank stating the deposited capital, which can vary depending on the company’s business form;
- • a list with the company managers and their signature and consent for the registration into the Commercial Register;
- • clean criminal records for all representatives and members of the company registered here.
The owners must submit an application at the Tax Office for the
income tax, withholding tax and payroll tax registration and for the VAT
registration no later than 15 days since the company was registered. As a result, the
newly formed entity will receive a tax identification number. The last step of
incorporation is the
registration for social security and health insurance, within
eight days after the first employee was hired.
What is the legislation concerning the Czech Trade Register?
The Czech Trade Register records a set of details concerning any type of legal entity that operates in this country. Its jurisdiction upon this matter is given by the regulations on the private legislation. A part of its powers is given by the Section 120 of the Act No. 89/2012, but it is also governed by the Act No. 304/2013 regarding the registration of natural persons and business forms in the Czech Republic.
What type of information does the Czech Trade Register gather?
The institution gathers a wide range of data concerning the identification of any company registered in the Czech Republic
, as well as of other types of legal entities, as presented above. It also collects information on the representatives of a company
As stated by the Trade Act, records of the entrepreneurs developing a business activity in the Czech Republic can refer to their names and surnames, their domicile, their personal identification number, the place of residence, the official address where their companies are registered, the main activities developed by the companies, the business permits necessary for developing a specific business activity and others.
As a general rule, the information stored by the Czech Trade Register
is available for the general public, but certain exemptions are applicable. The data on the Czech companies
can be verified on the institution’s online portal and this is available without paying any fee.
Which are the main corporate taxes in Czech Republic?
The corporate income tax for a company set up in the Czech Republic
is 19% in 2018, with exceptions like
pension and investment funds
that have a special 5% income tax. The
VAT is imposed at the standard rate of 21% and the registration is mandatory if the turnover exceeds CZK 1 million over twelve consecutive months. However, it is important to know that Czech Republic applies lower VAT rates for specific categories of products and services. The country imposes reduced VAT available at the rates of 15% and 10% and even 0%.
How to open a bank account in Czech Republic
Each company with establishments in Czech Republic needs to open a bank account by providing the firm’s main documents, like the Articles of Association. First, a provisory bank account is opened for depositing the minimum share capital, and then a permanent bank account will serve to the company’s financial operations. One must observe the banks' fees at the time of registration. Support cn be offered in this matter by our Czech lawyers who can also help you register the company for VAT.
Purchasing a ready-made company in Czech Republic
While many investors decide on establishing a business from scratch and develop their activities in their field of interests, there are other entrepreneurs who are interested in purchasing companies already registered in the Czech Republic. The proper solution, in this case, is the ready-made company, also known as a shelf company. Such company runs under the rules of an LLC and it is ready for business as soon as the owner receives the transfer of his/her company. Even though a shelf company is registered with the authorities, the new owner must apply for the tax identification number in order to align with the requirements in matters of business taxation. Among the reasons why a ready-made company is preferred instead of forming one is that such business can start the activities in just one day, as soon as the entrepreneur received the documents of his/her firm in Czech Republic.
Licenses and permits for your business in Czech Republic
The legal right of commencing and developing a series of activities in the Czech Republic is made with the help of special licenses and permits issued by the entitled authorities. For example, the Czech Trade Office accepts the applications of those entrepreneurs wanting to start a business in the trading field. As for those interested in the construction sector, they have to apply for a license with the Environmental Department and several other local institutions. Also, the Road Management Agency issues the type of permits and licenses for properties which must connect with the road system in the chosen city for construction. All the legal aspects of licenses and permits in Czech Republic should be attentively measured, therefore, it is suggested to talk to our team of lawyers. they can also help you with VAT registration in this country.
Business costs in Czech Republic
The registration procedure of a business in Czech Republic is free of costs, however, one must pay attention to the minimum share capital for the chosen business structure. The name verification of the company, which is the first step in a business formation, is also subject to zero costs, just like the registration for tax matters in the Czech Republic. The only things to consider when registering a business in this country are the public notary fees which will depend on the paid-up capital of the company. We remind that legal support is at your service if you want to start a business in Czech Republic.
The investment market in Czech Republic
Czech Republic is a
reliable investment destination
and this is sustained by the fact that the
level of investments
have rapidly increased in the last years. For example, the
number of green investments (which designates an
investment of a foreign company that
builds operational facilities from ground up) increased in the period 2016-2017, from 97 green investments to 110.
Foreign businessmen who want to open a company in Czech Republic should know that the country’s main investors are represented by the Netherlands, Austria, Germany and France, while the main investment sectors preferred by foreign businessmen were, at the level of 2016, the manufacturing sector (accounting for 32.7% of the total investments), financial and insurance activities (27.3%), wholesale and retail, real estate and information and communication sectors.
If you need to invest in other countries, we can put you in touch with our partners such as lawyers in Portugal
What are the main reasons for investing in Czech Republic?
The country benefits from a long tradition regarding the industrial production and has one of the
most skilled workforces
at the level of the European market. It also has a strong economy, that grows at a steady level and it enjoys a
high level of foreign investments, which are sustained through various policies. For example, in
2013, the local authorities have launched the “Welcome Package”, a policy that is addressed to
foreign investors who want to obtain a residence permit/work permit in this country as fast as possible.
As a general rule, most of the foreign investors have to submit an application for performing investments
in this country and, if approved, the investors will be able to access the local incentives that are available for the specific business sector in which the company will operate.
It is also important to know that
foreign investors do not need to obtain special authorizations for starting a business
here, unless the company’s activities will be related to sectors such as national security or nuclear energy. At the same time, it is important to know that, in its region, Czech Republic has one of the best credit ratings, set up in the A category (AA- awarded by Standard&Poor’s and Fitch Ratings, A1 – awarded by Moody’s Analystics).
What are the top investment sectors in Czech Republic?
The Czech economy relies on several economic sectors. In this sense, it is important to know that the main sectors are represented by the
automotive, machinery and electronics, airplane industry, life sciences and IT
– this being the key economic sectors of the country. However, it is important to know that relevant business prospects can be obtained in other fields, such as software development and information technologies.
For other details related to opening a company in Czech Republic
, you may contact our local specialists in company formation
, who can advise you on how to obtain special permits and licenses for specific business activities. We also may help you if you need company incorporation
services in other European countries, such as Malta or Austria.