Accounting outsourcing in the Czech Republic
Welcome to AMS Europe, your premier partner for navigating the financial complexities within one of the most dynamic jurisdictions in the European Union. We specialize in providing tailored accounting solutions that meet the unique needs of a diverse range of industries. Our expertise ensures that your financial operations are handled with precision and compliance, allowing you to focus on growth and innovation in your specific sector.
About Accounting in the Czech Republic
Accounting in the Czech Republic is governed by a set of rules and standards that align with both local legislative requirements and international norms, particularly the International Financial Reporting Standards (IFRS). This makes the accounting practices in the Czech Republic comprehensive and adaptable to global business.
Financial Reporting in the Czech Republic
Entities are obliged to prepare annual financial statements, which include:
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Balance Sheet: Shows the company’s assets, liabilities, and equity at the end of the reporting period.
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Income Statement: Also known as a profit and loss statement, it outlines the company’s financial performance, detailing revenue and expenses over the reporting period.
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Notes and Supplementary Information: Provides additional context and explanations about the financial statements, detailing accounting policies, contingencies, and other critical data.
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Cash Flow Statement: Analyzes the changes in cash and cash equivalents, segmenting cash flows into operating, investing, and financing activities.
For companies of a certain size, as defined by assets, turnover, or number of employees, there is also a requirement to produce a management report that discusses the company's operations and financial results, along with future risks and opportunities.
Tax Compliance in the Czech Republic
Accounting in the Czech Republic is heavily influenced by tax regulations. Firms must maintain precise records that can be audited by tax authorities. The key taxes include:
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Corporate Income Tax: Companies need to follow detailed rules for tax deductions, asset depreciation, and revenue recognition.
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Value Added Tax (VAT): Compliance with VAT involves meticulous bookkeeping to accurately track and remit taxes collected from customers and offset this against VAT paid on purchases.
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Personal Income Tax: Although primarily relevant for individuals, companies need to handle the correct withholding taxes on employee salaries.
Audit Requirements in the Czech Republic
Auditing is mandatory for joint-stock companies, and other entities based on criteria such as total assets, net turnover, or the average number of employees. Audits must be conducted by certified auditors who are members of the Chamber of Auditors of the Czech Republic, ensuring that financial statements are free from material misstatement and provide a true and fair view.
Advantages of Accounting Services in the Czech Republic Through AMS Europe
Regulatory Compliance
AMS Europe ensures your business is compliant with the Czech accounting and tax regulations, including Act No. 563/1991 Coll. on Accounting, reducing the risk of legal issues.
Accounting Software
We provide access to our accounting software, which offers clients real-time monitoring of their finances, including cash flow, and management of issued and received invoices, as well as transactions, ensuring comprehensive oversight of business operations.
Expert Support
Gain access to bilingual accounting consultations in Russian, Czech, and English, ensuring clear communication and tailored advice for your business needs.
Accounting Proficiency
Our team of expert accountants in the Czech Republic provides accounting services for all types of businesses, including those in the cryptocurrency sector. With our comprehensive knowledge, we ensure precision and compliance across the board.
Comprehensive Service Offerings
AMS Europe provides an extensive array of accounting services, including maintaining accounts, preparing financial statements, handling tax filings, payroll processing, auditing assistance, and managing compliance with local and international regulations.
Customizable Financial Solutions
AMS Europe offers tailored financial solutions to meet the unique needs of your business, providing scalable services that adapt as your company grows, ensuring efficiency and flexibility in financial management.
Advanced Tax Planning and Strategy
Understanding the complexities of tax regulations, AMS Europe s.r.o. offers advanced tax planning and strategy services designed to minimize liabilities and optimize tax efficiency. Our team of tax experts will assist with:
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Strategic Tax Planning: Developing long-term tax strategies that align with your business goals and regulatory requirements.
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International Taxation: Navigating the complexities of international tax laws for businesses operating across borders.
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Tax Compliance: Ensuring full compliance with Czech tax laws and regulations, including VAT, corporate income tax, and payroll taxes.
Product Plans
We offer a full range of accounting outsourcing services in the Czech Republic, providing comprehensive support tailored to the specific needs of your business. Our team of professionals assists with all necessary accounting functions, including bookkeeping, tax preparation, and compliance with local regulations. We also offer additional services such as the provision of legal addresses and preparation of required financial documentation. Our aim is to simplify and streamline your accounting processes in the Czech Republic, reducing bureaucratic hurdles while ensuring complete adherence to all regulatory standards.
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Basic
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Accounting and tax services
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Tax payment reminders
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Document management
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Data box management
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Accounting software
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Governmental representation
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Consultation with the accountant
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Up to 50 transactions per month
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Standard
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Accounting and tax services
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Tax payment reminders
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Document management
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Data box management
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Accounting software
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Governmental representation
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Consultation with the accountant
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Up to 250 transactions per month
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Full
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Accounting and tax services
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Tax payment reminders
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Document management
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Data box management
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Accounting software
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Governmental representation
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Consultation with the accountant
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Up to 500 transactions per month
Additional Services
Beyond traditional accounting and tax services in the Czech Republic, AMS Europe acts as a strategic partner to your business, offering customized advisory services that include:
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Financial Forecasting and Budgeting: Helping you plan for the future with accurate financial forecasts and budgeting advice.
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Business Performance Analysis: Analyzing financial and operational performance to identify improvement opportunities.
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Mergers and Acquisitions Support: Offering financial due diligence and valuation services for businesses considering mergers or acquisitions.
Additionally, we provide specialized services to further support your business needs:
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Payroll Accounting: Streamlining payroll processes and ensuring compliance with employment and tax regulations, thus enhancing the efficiency of your workforce management.
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Legal Address in the Czech Republic: Supplying a legal address for your business, which is essential for official registrations and correspondence within the Czech Republic.
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VAT Registration in the Czech Republic: Assisting with VAT registration processes to ensure compliance with local tax laws, crucial for both new and existing businesses expanding their operations.
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Company Formation in the Czech Republic: Guiding you through the complexities of setting up a company in the Czech Republic, including navigating legal requirements and registration processes.
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EORI Number Registration: Facilitating the registration for an Economic Operators Registration and Identification (EORI) number, which is necessary for businesses involved in importing or exporting goods within the EU.
Setting Up Your Accounting Services in the Czech Republic in Three Steps
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Consultation and Planning: Begin with a thorough consultation to understand your specific business needs and objectives. This will allow us to tailor our accounting services to align precisely with your requirements. We will discuss the scope of services, including bookkeeping, tax planning, compliance, and financial reporting, and determine how best to integrate our solutions with your existing processes.
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Onboarding: Once we identify your needs, we will proceed with the contract signing and the Know Your Customer (KYC) process to ensure all compliance requirements are met. Our team will guide you through the documentation process, which includes gathering all necessary financial records and information. We will establish a customized accounting services framework designed to streamline your financial operations and set up any necessary accounting software and tools.
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Ongoing Support: Enjoy comprehensive and uninterrupted support from our team. Our services include continuous tax compliance monitoring to keep you updated on current laws and regulations, efficient document management to ensure all financial records are accurately maintained and readily available, and periodic consultations to assess and refine our approach as your business evolves. Additionally, we offer real-time financial insights and reporting to aid in decision-making and strategic planning.
The Types of Companies We Serve
At AMS Europe s.r.o., we offer accounting outsourcing services tailored to a wide range of industries and business types. Here are the key sectors we serve:
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Startups and Small Businesses: We provide scalable solutions to help new and growing businesses manage their finances efficiently from the start.
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Medium to Large Enterprises: For established companies, our comprehensive accounting services in the Czech Republic include advanced financial reporting, compliance, and strategic financial planning.
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E-commerce: We specialize in digital business models, offering services tailored to the unique needs of online retailers and digital marketplaces.
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Technology Firms: Our team is well-versed in the fast-paced tech sector, providing services that accommodate rapid growth and innovation.
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Manufacturing and Production: We handle the complex accounting needs of manufacturing firms, including cost accounting, inventory management, and operational efficiency analytics.
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Real Estate: From property management to real estate investment trusts, we offer detailed financial tracking and regulatory compliance.
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Non-Profit Organizations: We understand the unique financial reporting and transparency requirements of non-profits, ensuring compliance and stewardship of funds.
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Cryptocurrency and Blockchain: We are adept at navigating the complexities of digital currencies and blockchain technology, providing accurate accounting for transactions within this dynamic sector.
Our diverse expertise allows us to adapt to the specific accounting needs of various industries, ensuring precision and compliance for every client we serve.
Payroll Accounting in the Czech Republic
Payroll accounting in the Czech Republic involves several specific procedures and regulations that employers must adhere to in order to ensure compliance with local tax and employment laws. Here are some key aspects:
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Registration of Employees: Employers must register their employees with the Czech Social Security Administration and the health insurance company prior to starting work.
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Social Security and Health Insurance Contributions: Both employers and employees are required to make contributions to social security and health insurance. These contributions are deducted from the employee's gross salary. Employers typically pay higher rates than employees.
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Tax Deductions: Employees are subject to income tax, which is deducted at source by the employer. The Czech Republic uses a progressive tax system where the tax rate increases with higher income levels.
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Payroll Periods: Typically, payroll is processed on a monthly basis. Employers are responsible for calculating the gross wage, deducting all applicable taxes and contributions, and paying the net wage to the employees.
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Minimum Wage: The Czech Republic has a statutory minimum wage that employers must adhere to, which is periodically updated.
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Year-End Tax Settlements: Employers must also handle year-end tax settlements (called "Rozúčtování") for their employees, which may involve additional payments or refunds based on the actual annual income and tax credits.
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Reporting Obligations: Regular reporting to the tax authority, social security administration, and health insurance bodies is mandatory. This includes monthly or quarterly filings detailing wages paid, taxes collected, and contributions made.
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Labor Law Compliance: Besides tax and contributions, payroll accounting is closely tied to labor law in terms of contractual agreements, working hours, overtime, vacation pay, sick pay, and other employee benefits and entitlements.
These components make payroll accounting in the Czech Republic a complex process that requires thorough knowledge of the local fiscal regulations and labor laws. We recommend to hire our payroll accountant to manage these responsibilities effectively.
Employee Compensation and Benefits in the Czech Republic
In the Czech Republic, employee compensation and benefits involves a specific set of practices due to local laws and regulations.
Employee Compensation
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Salaries and Wages: Compensation for employee services is recorded as an expense in the income statement. Payroll taxes and social security contributions are significant, as employers are required to contribute to health insurance and social security on behalf of their employees.
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Bonuses and Incentives: These are also recognized as expenses and are usually accrued in the financial statements when the employee's right to receive payment is established.
Mandatory Contributions
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Social Security Contributions: Employers must contribute to the Czech social security system, which includes pension insurance, sickness insurance, and public health insurance. These contributions are mandatory and represent a significant portion of labor costs.
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Health Insurance: Both employers and employees contribute to state health insurance. This is also a mandatory charge and must be accounted for separately from other social security contributions.
Employee Benefits
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Long-term Benefits: These include pensions, severance pay, and long-service awards. The accounting for these benefits depends on whether they are defined contribution or defined benefit plans. Defined contribution plans are simpler to account for, as the contribution is expensed when incurred.
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Short-term Benefits: Such as paid sick leave, holiday pay, and medical benefits, which are typically recognized as an expense as the related services are provided by the employee.
Accruals and Provisions
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Accruals are made for expenses that have been incurred but not yet paid, such as earned wages and bonuses.
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Provisions may be set up for items such as severance payments or risks of litigation related to employment practices.
Taxation
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Corporate Income Tax: Compensation expenses are generally deductible for corporate income tax purposes, reducing the taxable income of the company.
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Employee Income Tax: Employers are responsible for withholding income tax from employees' salaries and transferring it to the tax authorities.
Czech Republic's Double Tax Treaties
The Czech Republic has a wide network of double tax treaties (DTTs) with many countries, designed to prevent the double taxation of income and capital gains earned across borders. These agreements are crucial for foreign investors and companies operating in the Czech Republic, as they help clarify tax obligations and can provide significant tax relief.
Purpose and Benefits of Double Tax Treaties
Double tax treaties primarily aim to:
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Eliminate or reduce the incidence of double taxation, where the same income is taxed by two different jurisdictions.
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Define the taxing rights between the Czech Republic and its treaty partners on different types of income (such as dividends, interest, royalties, and salaries).
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Provide certainty and predictability to taxpayers regarding their tax liabilities.
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Prevent tax evasion and avoidance.
Key Features of Czech Double Tax Treaties
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Residence-based Taxation: The treaties typically use a residence-based approach to taxation, which means that individuals and companies are taxed by their country of residence on their global income, but with provisions to avoid double taxation on income that might also be taxed in the source country (where the income is generated).
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Reduced Withholding Taxes: For cross-border payments of dividends, interest, and royalties, DTTs often stipulate reduced rates of withholding tax. For example, while the domestic withholding tax rate on dividends might be higher, a treaty could reduce this rate significantly for qualifying recipients based in a treaty country.
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Permanent Establishment (PE): These treaties define what constitutes a PE—a fixed place of business through which the business of an enterprise is wholly or partly carried on—and stipulate that business profits are generally taxable in the country of residence unless the business has a PE in the other country.
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Mutual Agreement Procedure (MAP): DTTs provide a mechanism for resolving disputes arising from the interpretation or application of the treaty. This process helps taxpayers resolve disputes regarding double taxation that local remedies have not adequately resolved.
Impact on Foreign Investors and Businesses
For foreign entrepreneurs and multinational companies, understanding the impact of these treaties is essential for planning their investments and operations. By knowing the details of specific DTTs, businesses can structure their operations in a manner that legally minimizes their tax liabilities. For instance, choosing to route investments through countries with favorable DTTs with the Czech Republic can result in significant tax savings.
Updates and Changes
The Czech Republic continues to update and renegotiate its double tax treaties to align with global tax standards, such as those set by the OECD, including the implementation of measures related to the Base Erosion and Profit Shifting (BEPS) project. These changes aim to prevent multinational enterprises from exploiting gaps and mismatches in tax rules to avoid paying tax.
The Deadlines for Tax Submissions and Payments in the Czech Republic
In the Czech Republic, the deadlines for tax submissions and payments vary depending on the type of tax. Here are some general guidelines:
1. Personal Income Tax for Employees and Self-Employed
For employees, the taxes are usually withheld by the employer through a PAYE (pay-as-you-earn) system. However, employees who have additional income sources, deductible expenses, or wish to claim tax allowances must file a tax return.
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Deadline: April 1st of the year following the tax year.
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Extension: If using a tax advisor or filing electronically, the deadline extends to July 1st.
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Further Extension: A request can be filed for an additional extension until November 1st, but this needs specific approval.
Self-employed individuals need to file a tax return detailing their income and expenses.
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Filing Requirements: Along with their tax return, self-employed individuals must attach an overview of income and expenses, and possibly other required documents depending on their business.
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Deadlines and Extensions: Similar to employees, with the option to extend to July 1st automatically or November 1st with a request.
2. Corporate Income Tax
Businesses and corporations are required to file an income tax return based on their accounting periods, which usually align with the calendar year but can be set differently.
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Standard Deadline: Three months after the fiscal year-end.
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Extended Deadline: Six months after the year-end if using a tax advisor or filing electronically. This requires a request to be submitted before the original deadline.
3. Value Added Tax (VAT)
VAT applies to most goods and services sold within the Czech Republic. Businesses must register for VAT if their turnover exceeds 2,000,000 CZK.
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Filing Frequency: Monthly or quarterly, based on previous turnover.
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Deadlines: The 25th day following the end of the month or quarter.
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Special VAT Schemes: There are simplified schemes for small businesses and specific rules for dealing with EU transactions.
4. Road Tax
This tax is applicable to owners of vehicles used for business purposes, based on engine size and vehicle type.
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Filing Requirement: Annual filing with details about the vehicles used.
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Deadline: January 31st for the previous calendar year.
5. Real Estate Tax
Owners of land, buildings, or units are subject to real estate tax, which varies based on location, size, and use of the property.
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Payment Deadline: May 31st annually.
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Assessment: The tax is assessed by local municipalities based on the property details filed by the owner or as registered in the land registry.
Procedures and Compliance
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Electronic Filing: The Czech tax authority encourages electronic filing through their online system.
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Penalties: Late submissions and payments may result in penalties and interest charges. It's crucial to adhere to deadlines or to file for extensions when needed.
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Tax Advising: Especially for businesses and self-employed individuals, engaging a tax advisor is common to ensure compliance and optimal tax handling.
For the most specific guidance tailored to individual circumstances, consulting with our tax professional is advisable. This ensures compliance with all regulations and takes advantage of any applicable tax benefits or deductions.