Establishing a Company in Czech Republic
Establishing a company in Czech Republic is quite complicated process. It takes about 3 weeks and costs of assisted establishment of a company in Czech Republic are 990 eur. Non-residents are allowed to establish a company in Czech republic.
When we use term “company” we mean Limited Liability Company. This type of company is the most common form of undertaking in Czech Republic. That is because its shareholders (partners) are not liable for its debts. Establishing of other types of companies (Limited Partnerships, Partnerships) in Czech Republic only differs slightly.
How is the process of establishing a company in Czech Republic?
1. The first step is signing of Memorandum of association. It contains the intention of shareholders to found a company and basic information about the company, such as business name, address of registered seat, identification of executive directors and shareholders, scope of its business and the value of a stock capital. The signatures of shareholders must be officially authenticated. If there is only one shareholder, Memorandum of association is replaced by Deed of Establishment.
As for the address of the registered seat, it is not required to state the exact address – the city is sufficient. In the business register, the exact address must be included. We recommend you to state only the city name in the Memorandum of association/Deed of establishment. If company changes its registered seat within the same city, it is not required to change the Memorandum/Deed but it is enough to change the address in the Business register.
Shareholders are legal or natural persons. They are owners of the shares which means the profit of the company is divided between them. Executive directors are persons who act in the name of the company (statutory body of the company). A legal person is allowed to be an executive director in Czech Republic
EXAMPLE: Company X is an executive director of company Y. Company X must designate person to act in the name of the company Y. To replace a person acting in the name of the Company Y, it is not needed to change the Memorandum of Association. It is sufficient if company X designates a new person to this position.
In many companies (especially family companies) shareholders and executive directors are the same persons.
2. Executive directors must give Declaration on honour, that they fulfill conditions stipulated by law. Signature must be authenticated. To prove this, they need to submit their Criminal records not older than three months. Citizens of EU states must submit Criminal records from their country. Citizens of non-EU states must submit Criminal records from their country and from Czech Republic.
3. The property can only be registered as company´s seat if company has right to it. Company needs to submit ownership title, lease contract or just informal consent of the owner.
4. In Czech Republic a trade license is required to carry out business. There are two types of licenses:
- Unqualified ones – licenses accessible for everyone, regardless the education
- Qualified one – licenses are only accessible for companies, whose partner, executive director or employee has required education or qualification (person with such education is responsible representative)
The costs of registration are about 38 eur (1 000 CZK) per registration, irrespective of number of licenses. If company later decides to obtain new licenses, the costs are only 19 eur per registration, irrespective of number of new licenses.
5. Stock capital must be paid to so-called custodian of contributions. Custodian of contribution is a person, who is responsible for receiving contributions of shareholders. He is obliged to open a separate bank account, to which shareholders pay their contributions. For every shareholder, custodian of contributions issues Declaration of paid contribution. If he does so, he is liable for the contributions are really paid. It is allowed for one of the partners to be custodian of contributions.
6. All executive directors (not shareholders) apply for incorporation of the company into Business register. Application for incorporation must be sent on a standard form available on website of Ministry of Justice of Czech Republic (www.justice.cz). Application can be sent from this website or by postal service. The signature must be officially authenticated; if application is sent online it must be signed by advanced electronic signature.
7. If all the formalities are all right, court shall incorporate company within 5 working days and shall issue a Declaration of incorporation of the company into Business register of Czech Republic. When this declaration is submitted to bank, it releases financial sources located on a bank account opened by custodian of contributions (para. 5)
8. Company must register itself for corporate income tax. Application for registration is submitted to financial office, which issues Declaration of registration for corporate income tax. This registration can be done together with obtaining trade license (para 4)
9. If the company´s turn-over crosses 1 million eur, it must apply for registration for value added tax.
Existing Czech legislation offers several advantages for entrepreneurs:
- Relatively simple corporate VAT registration without the need for providing financial collateral
- A lower income tax rate of 19% in comparison to Slovakia (22%)
- No tax licences to buy
- A member’s contribution to the registered capital can be as little as CZK 1.00
- Consent is not required from the tax administrator for the sale of a company or transfer of equity interest.
- Low vehicle registration fees
The process of establishing a company in the Czech Republic is as follows:
- During the initial consultation, you will tell us about your business vision. We will help you select suitable core business activities, an address for the company’s registered office, a trading name and other essential particulars required to form a company. Consultations can be in person, by telephone or by e-mail.
- We will prepare all the documentation required to form a company in the Czech Republic.
- Once the documentation is signed, you will give us authorisation to represent you at the Commercial Register, Trade Licence Register and the Tax Office.
- We will open a bank account where the registered capital will be deposited.
- We will pay all the required fees at the Commercial Register and Trade Licensing Office.
- Once the company has been registered in the Commercial Register, we will give you the entire documentation, including an extract from the Commercial Register of the Czech Republic.
What does it cost to establish a company in Czech Republic?
How long does it take to incorporate the company in Czech Republic?
Optional company formation services in Czech Republic:
Virtual registered office for your company in the Czech Republic from EUR 30/month
Accounting for your company in the Czech Republic from EUR 70/month
- Fixed price with no hidden fees.
- Your company will be registered in the Commercial Registry within the agreed time, guaranteed.
- Services throughout the SlovakRepublic, CzechRepublic and Hungary are provided by a contracted partner of podnikajte.sk, FONTIONNEL s.r.o., which has already served more than 2,500 satisfied clients.