COMPANY IN CZECH REPUBLIC

The Czech Republic has long been very popular with the local business, and not without a cause. The Czech state is very loyal to commercial activity: both large holdings and small firms feel equally well in this country.

One of the key differences between the Czech Republic and the rest of Europe is its autonomy. For example, the official currency in the country is not the Euro, but the Czech koruna. At the same time, the state seeks to encourage not only home businesses, but also foreign investors. The are no special requirements for resident status or strict conditions for starting a business – the Czech Republic provides most of the benefits.

What form of business is better to open?

Like in most European legal orders, it is allowed to conduct business in various options established by law in the Republic. There are three organizational and legal forms of doing business in the Czech Republic:

• LLC (SRO);
• PE (ŽL);
• JSC (AS).

A limited liability company is considered the most advantageous organizational and legal form due to a number of significant advantages (extremely low threshold for authorized capital, lowest requirements for founders and an unlimited number of possible founders).

What documents are required?

You will need to prepare the following set of documents to open a business in the Czech Republic:

• application form;
• memorandum of association;
• charter;
• proof of shares distribution;
• certificate of clean criminal record for the director (does not apply to founders);
• appointment and application of the director;
• powers of attorney from the founders and from the person in charge of the authorized capital.

The Local Commercial Court is responsible for registering businesses in the Czech Republic. All documents must be translated into Czech, and Cortax can help with prompt and competent translation of all required certificates.

Specifics of the company registration in the Czech Republic

It is advisable to remember the following nuances of starting a business in the Czech Republic:

• founders can have any citizenship;
• a director is required (preferably a resident; foreign persons will need a work permit);
• information about the company members is public (information about shareholders, directors, and other persons is publicly available);
• no requirements for mandatory contributions to the authorized capital;
• the minimum amount of the authorized capital is conditional – only 1 CZK;
• contribution of 30% to the capital is sufficient, the rest can be deposited within 5 years;
• information about the beneficiaries is stored in the Register of Ultimate Beneficial Owners with restricted access (third parties do not have access to information without requests from government agencies).

Requirements for the name of the organization are the same as those in other European regions. The name must be unique, the use of English is allowed (no need to translate it into Czech).

Each firm must have its own office and legal address. A notarized application of the address owner for rent will be required for registration. Cortax can assist with the preparation and certification of this document.

The applicant receives the following documents upon the registration of the company in the Czech Republic:

• certificate of registration of the company in the register;
• certificate of individual tax number;
• copies of the charter and memorandum of association (if necessary).

As such, Czech legislation is very loyal to starting a business. This applies to both the security of information about the beneficiaries (third parties may not even know who owns the company) and easier requirements for the name and other important issues.

What you need to know about taxes in the Czech Republic

The following types of taxes are legally established in the Czech Republic and should be borne in mind by every entrepreneur:

• corporate tax. Base rate is 9%;
• VAT. Standard rate is 21%. Its value is 0% if the company exports within the EU. At the same time, companies with an annual turnover of less than 1 million CZK are exempted from the VAT tax liability;
• mandatory contributions for employees. Social insurance is 31.3%, and medical insurance is 13.5%;
• dividend tax. The rate is 15% if paid to a non-resident (it is beneficial to become a resident of the Czech Republic).

The minimum wage, which is 15,200 CZK in 2021, must also be noted. The country has a progressive income tax, the base rate of which is 7%.

Cortax helps businesses register in the Czech Republic. Our aim is to facilitate the translation of the necessary documents, help with notarization and other important steps for registration.