Doing Business In Czech Republic – When opening a company in the Czech Republic, the investor must go through the steps that are usually set in this case. Our local company formation experts can help you throughout the process of starting a company in the Czech Republic, assisting with the preparation of incorporation documents, hiring a local accountant, providing a legal address and other important issues. .
The legislation in the Czech Republic defines a set of legal entities similar to the legislation in other EU countries. When starting the process of establishing a company in the Czech Republic, it is important to know the advantages of each type of business. You can choose the most suitable from the following types of companies:
Doing Business In Czech Republic
Czech Limited Liability Company (Spolecnost s Rucenim Omeznym-SRO) is generally preferred by small and medium-sized businesses and is a popular legal entity type due to its requirements. It can be established by a single founder (individual or legal entity) or an association of more than 50 people. An SRO may or may not form the sole shareholder of another SRO with one shareholder. At the same time, a natural person can be a shareholder of only three other limited liability companies.
Entering The Czech Republic Market
The formation of a joint stock company (Akciova Spolecnost-AS) requires at least two shareholders or a corporate body, whose board is controlled by a supervisory board and must have a local address. There is also a low share capital requirement – 2 million CZK (in the case of private equity companies) – and therefore it is often chosen by large companies. In case the company is established through a public share offering, the required capital is 20 million CZK.
Our accountants in the Czech Republic can handle accounting, auditing, payroll and tax reduction for companies operating in the country. We provide support for tax registration and even financial planning for business owners. It is recommended to work with a specialized company instead of this type of department in the company, because the cost is more convenient. Additionally, you will be guaranteed that all accounting procedures will be done correctly.
Below are some basic steps for opening a company in the Czech Republic, and our team of experts can provide legal advice on these issues:
A Czech branch, subsidiary or representative office is a form of business usually established in the Czech Republic by a foreign company, which can be established as a separate entity from the parent company (subsidiary) or the parent opened in the Czech Republic. Republic of the company expansion (in the form of a branch).
Types Of Czech Companies
A company established in the Czech Republic must be registered with the Trade License Office and this is a mandatory requirement for establishing a company in the Czech Republic. To obtain a trade license when setting up a company in the Czech Republic, the following documents are required:
Within more than 90 days from the date of establishment of the company or issuance of trade license, the trader must be registered in the trade register of the District People’s Court. Along with the standard application to establish a company in the Czech Republic, the founder must submit:
The owner must submit an application for registration of income tax, withholding tax and salary tax and VAT registration to the tax inspection agency no later than 15 days after the company’s registration. Therefore, the newly created entity will get a taxpayer identification number. The final stage of establishment is to register for social security and health insurance within eight days of hiring the first employee.
The corporate income tax rate for companies incorporated in the Czech Republic is 19% in 2018, with exceptions such as pension and investment funds, which have a special income tax rate of 5%. Value added tax is set at a standard rate of 21%, and registration is mandatory if the value exceeds 1 million CZK for twelve months. However, it is important to know that the Czech Republic applies a lower VAT rate to certain types of goods and services. The country uses low value added taxes available at 15%, 10% and even 0%.
Doing Business In The Czech Republic 2017 By Pp Agency
Every company established in the Czech Republic must submit the main company documents such as articles of association and open a bank account. First, a temporary bank account is opened for the minimum share capital contribution, and then a permanent bank account will serve for the financial operations of the company. Bank fee is paid at the time of registration. Assistance can be provided by our Czech lawyers, who can help the company register as a VAT payer.
While many investors decide to start a business from scratch and develop activities in their field of interest, there are other entities that are interested in buying a company registered in the Czech Republic. The right solution in this case is a turnkey company, also known as a shelf company. The company operates under the terms of an LLC and is ready to operate as soon as the owner receives the transfer of his company. Even if the shelf company is registered with the authorities, the new owner must apply for a taxpayer registration number to comply with business tax requirements. One of the reasons that ready-made companies are more popular than creating one, is that the business can start working in just one day, when the entrepreneur receives his company documents in the Czech Republic.
The legal right to start and develop activities in the Czech Republic is guaranteed by special permits and licenses issued by the authorities. For example, the Czech Chamber of Commerce accepts applications from entrepreneurs who want to start a business in the field of commerce. On the other hand, those interested in the construction sector must apply for a permit at the Department of Environment and many other local organizations. At the same time, the Road Management Agency issues the types of permits and property permits that must be connected to the road system in the city selected for construction. All legal aspects of licenses and permits in the Czech Republic require careful consideration, so we recommend that you speak to our legal team. They can also help with VAT registration in that country.
The process of registering a company in the Czech Republic is free, however, attention must be paid to the minimum share capital of the chosen business structure. Company name verification, the first step in establishing a business, is free, as is tax registration in the Czech Republic. The only thing to consider when registering a company in this country is the notary public fee, which will depend on the company’s paid-up capital. We remind you that legal assistance is at your disposal if you want to start a business in the Czech Republic.
Establish A Subsidiary In The Czech Republic
The country has benefited from a long history of industrial production and has the most skilled labor force in Europe. It also has a strong economy with steady growth and high levels of foreign investment, sustaining the various policies it has adopted. For example, in 2013, the local authorities introduced the “Valium Package” policy, which focused on foreign investors who wanted to get a residence/work permit in the country as soon as possible.
In general, most foreign investors must apply to invest in the country and, if approved, the investor will have access to local incentives available for the specific business sector the company will operate. .
It is also important to know that foreign investors do not need to obtain a special license to start a business, unless the company’s activities are related to sectors such as national security or nuclear energy. At the same time, it is important to know that the Czech Republic has one of the best credit ratings in its region, established in the category A (AA Awarded by Standard & Poor’s and Fitch Ratings, A1 by Moody’s Analytics).
The Czech economy depends on many economic sectors. It is important to know that the main sectors represented are the automotive industry, mechanical and electronic engineering, aircraft industry, life sciences and IT – these are the main economic sectors of the country. However, it is important to know that relevant business perspectives can be obtained in other areas such as software development and information technology.
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For other information related to opening a company in the Czech Republic, you can contact our local company formation experts, who will advise you on obtaining special permits and licenses for specific business activities. We can also help you if you need company incorporation services in other European countries such as Malta or Austria.
Call us on +420 721 565 868 to schedule an appointment with one of our experts.
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