Setting up a Company in Czech Republic
It takes about 3 weeks to set up a company in Czech Republic and the costs of assisted set up are 990 eur. It is allowed for non residents to set up a company in Czech Republic.
In this article we use term “company” but we mean so-called “Limited liability company” which is the most frequent type of company in Czech Republic. That is, because its owners (also partners or shareholders) are not liable for company´s debts.
The process of setting up other types of companies is different only in minor details.
To set up a company in Czech Republic, following documents are required:
1. Memorandum of Association. Memorandum is the most important document. It contains shareholders wish to set up a company – a legal entity different from shareholders. Except this, Memorandum also contains essential information about the company: its name, place of its seat, identification of partners and executive directors, scope of company´s business and value of the stock capital. Memorandum must be signed and partners’ signatures must be officially authenticated.
If there is only one partner Memorandum of association is replaced by Deed of establishment.
Partners are legal or natural persons. The profit of the company splits between them.
Executive directors are persons who act in the name of the company (statutory body of the company). In Czech Republic legal person is allowed to become an executive director. This simplifies the process of change of the person who acts in the company´s name.
EXAMPLE: Company A is an executive director of company B. Company A must designate person to act in the name of the company B. When company A decides to replace the person acting in the name of company B it designates a new person to that position. This way there is no need to change Memorandum of association/Deed of establishment.
Shareholders and executive directors are often the same persons.
2. A document proving company´s right to use property as its seat. This can be proved by submitting a title of ownership, lease contract or consent of the property owner. The consent of the owner can be an informal letter, but official authentification of his signature is needed.
3. Declaration on oath submitted by executive directors. They must declare, that they fulfill all the conditions required by law for the position of an executive director.
4. Except this, executive directors must submit their Criminal records not older than three months. If the executive director is an EU citizen, he must submit Criminal records from his country. If he is not an EU citizen, he must submit Criminal records from his country and from Czech Republic.
5. Trade license. Company needs a trade license to carry out business. In Czech republic, there are two types of licenses
- Unqualified licenses – accessible for everyone, regardless the education
- Qualified licenses – only accessible for companies, whose partner, executive director or employee has required qualification or higher education (person with such qualification or education is responsible representative)
6. Together with application for trade license, company can submit an Application for registration for corporate income tax. It is strongly recommended to do so. If company does not do so, it will have to register for it later.
7. Declaration of paid contributions. All partners must pay their stock capital contributions to so-called custodian of contribution. Custodian opens a new bank account for this use. He issues said Declaration for each partner who paid his contribution. He is liable for the contributions are really paid.
After these documents are completed, all executive directors apply at competent court for incorporation of the company into Business register. Application for incorporation must be submitted on a standard form available on the website of Ministry of Justice of Czech republic (www.justice.cz). Application (if signed by advanced electronic signature) can be send online from this website or can be printed and send by postal service. If so, it must be signed and signatures must be officially authenticated.
Competent court shall incorporate the company into Business register within 5 working days and shall issue a Declaration of incorporation of the company into Business register of Czech Republic.
After this declaration is submitted to bank, it releases stock capital money for company to use.
After receiving said Declaration, company is ready to carry out business.
The registration for value added tax is optional in Czech Republic. The registration is mandatory if the turn-over of the company crosses 1 000 000 eur, which is about 37 000 eur.
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 setting up 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 setting up 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.