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Company Formation Czech Republic

HOW TO START A BUSINESS IN THE CZECH REPUBLIQUE

Introduction

Entrepreneurial even during the Communist era, Czechs have seized every opportunity to demonstrate their free-market credentials since joining the EU in 2004. Today the Czech Republic offers a stable and welcoming home to foreign investors. But to make the most of the opportunities here, you need local knowledge. That's our business: contact us for more information.

WHY USE EURO START TO ASSIST YOU WITH YOUR FORMATION?

  • We provide expert help and advice in setting up your business and will hold your hand every step of the way throughout the process from start to finish.
  • A unique one stop solution for all your European formation requirements that you can’t find anywhere else.
  • We take care of the entire process from start to finish so you can relax knowing our experts will organise everything.

What are the main types of company in the Czech Republic?

There are four main kinds of business entity for foreign investors and they are as follows:

  • limited liability company (SRO)
  • joint stock company partnership (AS)
  • partnership
  • branch office

REQUIREMENTS

  • Limited liability Company (SRO) - The registered capital cannot be less than CZK 200,000. The amount of a shareholder’s investment contribution must be at least CZK 20,000. At least 30 % of each investment contribution must be paid up before the application is submitted to the Commercial Register. The total of paid-up investment contributions and the value of non-monetary investment contributions must amount to at least CZK 100,000.Shareholders are obliged to pay their contributions no later than in 5 years after the company has been registered. If they do not, then they are due to pay the company 20% of the unpaid amount or be excluded by the company.
  • Annual filing of accounts must be completed, board of Directors is not required, and requires the appropriate business licenses in order to trade. A registered manager is necessary.
  • A clear criminal record needs to be provided. This can be applied for in your home country.  The procedure takes approximately 2 weeks and upon receipt this then needs to be Notarised and Apostilled, which takes another week.
  • Registered address
  • Data Box (compulsory for official letters from state authorities)

What are the main features of an (AS) joint stock company?

  • minimum share capital CZK 2 million (€70,000)
  • if via a public offering, minimum share capital CZK 20 million (€700,000)
  • 30% of share capital to be paid up
  • two-tier system comprising management and supervisory boards
  • reserve fund from profits to be built up to 20% of registered capital

What are the accounting/audit requirements for an (AS) joint stock company?

A statutory audit is mandatory if at least one of the following criteria is met:

  • balance sheet exceeds CZK 40 million (€1.4 million)
  • net turnover exceeds CZK 80 million (€2.8 million)
  • number of employees exceeds 50

What are the main forms of partnership in the Czech Republic?

There are two main kinds of partnership under Czech corporate law:

  • general partnership (all partners have equal and unlimited liability)
  • limited partnership (at least one partner has limited liability)

What are the main features of a branch office?

  • branches are not separate legal entities, but part of a foreign parent
  • branch manager may be Czech or foreign national
  • branch requires trade license before it can be registered
  • accounting records to be prepared in Czech language

How easy is it to recruit staff in the Czech Republic?

If you are seeking to hire Czech staff, you should have no trouble finding well-educated and motivated applicants. Labor laws are complex, however. For advice on the best way forward, contact one of our recruitment specialists in Prague.

What is the regulatory environment like?

The Czech Republic has made strong progress in its efforts to liberalize the business environment. 85% of the economy is now in private hands and foreign investment, reflecting this trend, has soared. But there’s still plenty of red tape around, which is why it is essential to secure expert advice on legal and accounting issues. For more details, please contact us.

Are there financial incentives available?

Czech authorities offer a wide range of financial incentives for foreign investors:

  • new manufacturing investment: ten years’ full relief of corporate tax
  • technology and business investment: the state pays up to 50% of costs
  • substantial job-creation and training grants

And what about banking facilities?

Foreign investors are well served by an array of international and local banks now operating in the Czech Republic. It is worth noting, however, that setting up a corporate bank account can be a complex procedure. Make it simple – talk to us and we’ll arrange everything.

How can I get more information?

Please contact us for further details and we will be pleased to discuss matters further.