The beautiful Czech Republic boasts investor-friendly regulations and a highly-educated yet low-cost workforce—a true paradise for foreign investors!
Work with CompyCo to leverage the advantages a business in the Czech Republic has to offer. We’re here to walk you through the process of getting your company up and running outside your jurisdiction in no time.
An ever-growing competitive economy, lucrative market for goods, and relatively simple process of registration make the Czech Republic a perfect choice for business owners from all over the world.
With its excellent infrastructure and highly strategic position in the heart of Europe, the Czech Republic economically and geographically connects the west with the east perfectly.
The country has established itself as a leader in the manufacturing industry and financial intermediations. Owing to its scenic architecture and fairytale castles, the tourism sector, as well as property development and renting, are some of the most popular areas of investment. The region is also considered an automotive paradise, with countless manufacturing companies leveraging the modern infrastructure.
Forms Of Companies in the Czech Republic
- SRO “společnost s ručením omezeným”—limited liability company (LLC)
- AS “akciová společnost”—joint stock company
- Branch “odštěpný závod/zahraniční pobočka”—large company branch
- Partnership “komanditní společnost”—limited and general partnerships
- Free Zone LLC “společnost s ručením omezeným ve volné zóně”—Free Zone limited liability company
Most of the companies in the Czech Republic are SRO (limited liability company) and AS (joint stock company)
What are the differences between AS and SRO companies?
Among the various business entity types in the Czech Republic, the most popular are the limited liability AS and SRO companies. While registration requirements for these countries may be similar, there are a few ways in which they can be differentiated.
- SRO companies require a minimum capital of €1 to set up, while AS companies have a higher issues capital value of €75,000. For both AS and SRO companies, the amount of capital can be paid within the first five years of registering your company.
- AS companies require a supervisory board with a minimum of three members apart from the company directors. SRO companies, on the other hand, only require the appointment of one director.
- AS companies are strictly required to meet audit requirements and keep up financial statements with the relevant authorities. While SRO companies are required to file annual financial statements to tax authorities, they’re only required to do an audit if they meet the criteria below:
- They’ve hired over 50 employees
- Their balance sheets are above €1.5 million
- They have an annual turnover of €3 million
Have any queries about SRO and AS companies? Get in touch with us today and we’ll help you make the right choice!
Fundamentals Of A Limited Liability Company
Corporate Tax in the Czech Republic
VAT in the Czech Republic
Fundamentals of limited liability companies in the Czech Republic
|Limited liability company||s.r.o.|
|Minimum Share capital||1 CZK|
|Registered office required||Yes|
|Physical office required||No|
|Min. number of Shareholders||1|
|Min. number of Directors||1|
|Local Director required||No|
|Bank signatory must travel||Mostly not|
|Timescale for company formation||7 days|
|Timescale for bank account opening||7 days|
|Timescale for obtaining VAT number||7 days|
|Statutory audit requirements||No|
|Shelf companies available|
How Can I Set Up My Company In The Czech Republic?
The process of starting a tailor-made company in the Czech Republic is relatively straightforward. In fact, the country is known for its favorable legislations that make it easier to set up a shelf company here than in most other European countries.
While the process may be straightforward, it can be intimidating to set up a company on your own when you’re outside your jurisdiction. A dedicated partner like CompyCo will help make the process quick, simple, and hassle-free for you.
To register a tailor-made company in the Czech Republic, you need to have several documents notarized and authenticated. The next step is to register your new company in the Czech business and trade register. After this is complete, you have to open a Czech bank account to hold the initial deposit that’s required.
Ready-made companies, also known as shelf companies, are set up on behalf of the future shareholder(s) who buy them. Once you choose a company from the Czech business register, you can start trading immediately. This is the easiest alternative and requires minimal effort on the part of the shareholder(s).
The necessary banking, accounting, and taxation-related procedures come up next in your company registration process.
The experts at CompyCo have extensive experience in setting up countries in the European jurisdiction and can effectively guide you through the process.
Our concierge service caters to your new business’s needs from the moment of its inception and registration to getting it up and running. We guide you through the incorporation process with expert advice and a full range of services to prepare any documentation, obtain relevant licensing, and complete the required registrations on your behalf.
CompyCo’s work isn’t complete there. We also offer post-incorporation support to help you settle into your new business outside your jurisdiction!
How Can You Open Bank Account In The Czech Republic?
Some of the accounting obligations to take into consideration are:
- In the Czech Republic, the tax year corresponds to the calendar year
- It’s necessary to submit financial statements every year. These include profit and loss accounts, an annex, and a balance sheet. All Czech companies are required to maintain books of total payments received and expenses incurred, details of debit and credit, and total sales and purchases.
- In the Czech Republic, the corporate tax rate is 19% on all net income. There’s a special tax rate for certain investment funds and pension funds.
- The standard VAT rate in the Czech Republic is 21% but can be 15% or 10% based on the type of product or service the taxpayer offers. Czech companies are issued VAT numbers with the format of the country code CZ followed by a 9-digit number, which ends with a letter.
- A special program called EET (“elektronická evidence tržeb”) has been running in the Czech Republic for several years. This obliges all legal entities accepting cash payments to register their profits electronically
Accounting & Taxation
Some of the accounting obligations to take into consideration are:
- Germany operates under a standard VAT rate of 19%. Once your company is registered for taxes, you’ll need to submit a monthly report.
- All German tax returns need to be filed by 31st May after the end of the company’s financial year.
- The requirements for tax filing and disclosure may vary depending on the type of company. Small firms should create a balance sheet, while medium-sized firms need a balance sheet, management report, and profit & loss statement.
- Any reports submitted by medium-sized firms need to be audited.
- Non-resident German companies are only taxed on the income derived from their Germany-based ventures.
- Everyone working in Germany has to pay progressive personal taxes depending on their annual income.
How Can You Employ Staff In the Czech Republics?
The Czech Republic has a large, highly-qualified, and incredibly affordable workforce that you can hire for your company. Once you register your business as an employer, you begin to hire employees for your company.
CompyCo takes care of all your registrations, writing employment agreements, PEO or direct employment, recruiting, payroll, and any other Human Resource services to cater to your needs in the foreign country. By taking care of all aspects of the employment process, we let you have more time to focus on your business activity.
If you decide to get a deeper understanding of the foreign country’s requirements, we can set up an account with our unique software that will cater to all your needs. This will provide all the information you need regarding the HR functions, payroll requirements, and business obligations to your employees. With it, you’ll have full control of all your functions as an employer in the Czech Republic.
Take a look at more of our HR services here