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Our specialists in company formation handle all the procedures of company incorporation in Czech Republic such as: drafting the constitutive documents, hiring a local accountant, offering a registered office for the newly formed company etc.
The Czech limited liability company (Spolecnost s Rucenim Omezenym-SRO) is usually preferred by small and medium sized businesses and it is a popular form of business, 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 sole shareholder of another SRO. In the same time, one individual can be the sole shareholder of only three other limited liability companies. The sum of CZK 1 (5 euro cents) is the minimum registered capital for this kind of company.
Setting up a joint stock company (Akciova Spolecnost-AS) requires at least two shareholders or one corporate body, a managing board which is controlled by a supervisory council and must maintain a local address. There is also a demand for a higher minimum share capital, of 2 million CZK, this is the reason why it is chosen by major forms of businesses. In case the company is set up through a public offer of shares, the capital required is CZK 20,000,000.
Czech branch, subsidiary or representative office are forms of businesses incorporated in the Czech Republic by foreign companies and they can be set up as separate entities from the parent company (Czech companies having the foreign company as shareholder) or extensions of the parent-company opened in Czech Republic.
Company formation in Czech Republic
The new company set up in Czech Republichas to be registered with the Trade License Office. To obtain the trade license, the following documents are required when starting a company in Czech Republic: the statutory document for companies not registered yet with the Commercial Register or the excerpt from the Register for the established businesses, the lease agreement of the office space and a payment proof of the administrative fee.
In not more than 90 days, since the company was set up or the trade license was released, the business must apply to the Commercial Register of the Regional Commercial Court. Along with the standard application, the founders must submit:
- the articles of association,
- documents attesting the right to develop business activities on the Czech Republic territory,
- confirmation from the administrator of the registered capital,
- a certificate from the bank stating the deposited capital,
- a list with the company managers and their signature and their consent to the registration into the Commercial Register,
- clean criminal records for all representatives and members,
- extract from the Trade Licenses Register.
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 from the company registration. 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 is hired.
The corporate income tax for a company set up in the Czech Republic is 19% in 2015, with exceptions like pension and investment funds that have a special 5% income tax. The VAT is 21% and the registration is mandatory if the turnover exceeds CZK 1 million over twelve consecutive months. The registration for both health insurance and social security needed to start a company in Czech Republic has to be done within eight days from the first date of work of the first employee.
Starting a company in the Czech Republic can be difficult since it involves such complex procedures. The team from CzechCompanyIncorporation.com is very qualified and benefits from extensive expertise in this area.
Mihai Cuc, Partner of
Enescu&Cuc; Law Firm www.romanianlawoffice.com