Opening a Business in the Czech Republic
Opening a Business in the Czech RepublicUpdated on Sunday 26th January 2020
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With a highly developed industrialized economic system, the Czech Republic is often the choice of many foreign investors who want to open a business. This country offers many advantages for new businesses, ones that cannot be found in other European countries. Foreign entrepreneurs should first consider asking for the help of a Czech lawyer, as setting up a business in the Czech Republic can sometimes be a rather complex process.
What type of business can I open in Czech Republic?
The first aspect that should be taken into account by a foreign investor is the type of business that he/she wants to establish in the Czech Republic and there are various options to choose from, like the limited liability companies (s.r.o.), joint-stock companies (a.s.), general commercial partnerships (v.o.s.) and limited partnerships (k.s.). Another option can be to create a branch or a representative office for a parent-company overseas. These are not, however, legal entities as they are dependent on the parent company. We remind that our attorneys in the Czech Republic can help you with choosing the right Czech type of business that best suits your interests.
How do I open an LLC in Czech Republic?
A limited liability company or a SRO as it is known in the Czech Republic can be established for a minimum share capital of CZK 1 or EUR 1 and at least one stockholder. It is good to know that a foreign investor can own maximum 3 LLCs in the Czech Republic as a single shareholder. SRO is the most popular business structure in Czech Republic which can be set up with minimum requirements, less bureaucracy and with complete support offered by our Czech team of lawyers. Also, an LLC in Czech Republic can have more than 50 employees.
How can you open a joint stock company in Czech Republic?
Foreigners interested in opening joint stock companies in Czech Republic need to consider depositing the minimum share capital of EUR 75,000 which is payable within 5 years from the time of company registration in this country. This is also an important business structure adopted by foreign investors in the Czech Republic, for which a board of managers and a supervisory board are necessary at the time of incorporation.
Requirements for registering a business in the Czech Republic
Foreign legal structures are allowed to conduct trade operations in the Czech Republic (including the purchase of real estate) under the same conditions as the Czech investors. Legal entities and branch offices can be established only if they are registered with the Commercial Register first. Some of the documents that need to be submitted with the application are: copies of the partnership agreement, authorized copies of trade licenses, occupational lease etc. When registering a Czech company, a foreign investor should also complete the following steps:
- choose a name for the company and check for its uniqueness;
- find offices or an open space for the legal entity (initially the requirement is only for the address where the company is registered);
- depending on the type of business activity, a trade license or other specific permits can be required;
- in the case of a limited liability company (LLC), a bank account for the share capital deposit also has to be opened;
- registration for taxes, social security, and health insurance is also required.
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.
Our Czech law firm can assist and advise you through the whole process of opening a business in the Czech Republic, so feel free to contact our team.