Company Formation in the Czech Republic
Our team specializes in facilitating the establishment of companies in the Czech Republic, offering comprehensive turnkey solutions. Additionally, we extend our support by providing tailored accounting and legal services to meet the specific needs of our clients.
Our service portfolio encompasses a wide spectrum of company registration services within the Czech Republic. This includes furnishing a legal address and preparing all essential incorporation documentation.
We initiate firm registrations through various methods, including power of attorney, in-person notarization, or electronically. Entrusting your company registration to us ensures access to professional and reliable services. We are committed to establishing a steadfast partnership with you, addressing your future legal and corporate requirements.
Limited Liability Company
Limited Liability Company in the Czech Republic is a type of business entity that is popular among small and medium-sized businesses. It offers a flexible and straightforward business structure that provides limited liability protection to its owners, who are known as shareholders.
Benefits to Open a Company in the Czech Republic:
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Limited Liability Protection: One of the most significant advantages of forming an LLC is the protection it provides. Shareholders' liability is generally limited to the amount they contribute to the company's share capital. This shields your personal assets from business debts and liabilities, ensuring peace of mind.
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Low Minimum Share Capital: The Czech Republic requires a minimal share capital investment starting at 1 CZK. This minimal capital requirement makes starting a business more accessible to a wide range of entrepreneurs.
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Versatility for Business Activities: LLCs are highly versatile, enabling engagement in a diverse range of business activities. Whether you're involved in trading, services, manufacturing, or technology, this business structure can adapt to your unique business needs.
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Straightforward Registration and Governance: Set up a company in the Czech Republic is relatively simple.
There are Certain Advantages to Open a Company in the Czech Republic
Strategic Location
The Czech Republic is strategically located in the heart of Europe, providing easy access to both Western and Eastern European markets. This central location makes it a favorable hub for businesses engaged in international trade.
Infrastructure
The country has modern infrastructure, including well-developed transportation networks, access to major European cities, and reliable utilities. This infrastructure is conducive to efficient logistics and operations.
Skilled Workforce
The country boasts a well-educated and skilled workforce with a strong focus on technical and engineering disciplines. This can be especially advantageous for companies in high-tech and manufacturing sectors.
Access to EU Markets
As a European Union member state, the Czech Republic provides access to a market of over 446 million consumers. This makes it an attractive base for companies seeking to tap into the EU market.
Business-Friendly Environment
The Czech Republic offers a business-friendly environment with a stable economy, low inflation, and low corporate tax rates. The regulatory framework is transparent, making it easier to navigate legal requirements.
Investment Incentives
The Czech government offers various incentives to attract foreign investment, including grants, tax relief, and subsidies in specific industries and regions. These incentives can significantly reduce startup and operational costs.
Product Plans
We provide a comprehensive suite of services tailored for company formation in the Czech Republic, designed to streamline every phase of the incorporation process. Our team delivers expert assistance in securing all requisite documentation. Moreover, our offerings extend to essential operational support services such as accounting, securing a legal business address, and preparing all necessary incorporation documents. Our objective is to simplify and accelerate the company formation process in the Czech Republic, effectively navigating through bureaucratic procedures and ensuring adherence to all legal frameworks. By entrusting us with the intricacies of setting up your business, you gain the assurance of a smooth, compliant, and efficient establishment process, allowing you to focus on your business growth and operational objectives.
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Basic
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Lookup the name in the registry and verify its uniqueness and localization.
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Choosing the organization's business registration type.
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Notarial deed of a company.
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Register a company with the Trade Licensing Office
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Registration for tax purposes with the Tax Office
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Standard
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Lookup the name in the registry and verify its uniqueness and localization
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Choosing the organization's business registration type
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Notarial deed of a company
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Register a company with the Trade Licensing Office
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Registration for tax purposes with the Tax Office
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Yearly legal address
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Full
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Lookup the name in the registry and verify its uniqueness and localization
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Choosing the organization's business registration type
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Notarial deed of a company
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Register a company with the Trade Licensing Office
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Registration for tax purposes with the Tax Office
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Yearly legal address
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Accounting services
Our Additional Services
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Company incorporation in the Czech Republic and registration of company branches and crypto companies
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Winding up the limited liability company, voluntary associations, cooperatives
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Accounting services
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Virtual address
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Assistance with opening bank accounts
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Drafting and negotiating of articles of incorporation, shareholders' agreements, commercial contracts, employment contracts
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Registration of statutory changes
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Assistance with business licence applications
Which are the Main Corporate Taxes in Czech Republic?
In 2024, the Czech Republic will see several significant changes to its corporate tax system and VAT rates as part of a government consolidation package designed to address budget deficits. Here are the key changes:
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Corporate Income Tax (CIT): The CIT rate has increased from 19% to 21% for tax periods starting in 2024. This applies to all business profits, including capital gains from the sale of shares, unless exempt under specific regimes. A notable introduction is the 'windfall tax,' which is a 60% CIT surcharge (resulting in a total CIT of 81% on certain profits) applied to large banks and companies within the energy sector, based on excess profits calculated from a specific formula (PWC).
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VAT Changes: A significant reform in VAT rates has consolidated the two existing reduced rates into one, setting it at 12%, while the base rate remains at 21%. This consolidation aims to lower the tax burden on basic goods such as food, housing, and medical products. Additionally, books, including printed and electronic forms, are now completely exempt from VAT, aiming to support education and culture. Certain supplies that previously benefited from reduced rates, like beverages, transport, and medical devices, have been shifted to the standard rate (KPMG).
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Withholding Taxes (WHT): The Czech Republic imposes withholding taxes on certain types of payments to non-residents, such as dividends, interest, and royalties. The standard withholding tax rate is 15%, but this can be reduced or eliminated under double tax treaties or EU directives.
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Tax Deductibility Adjustments: For corporate taxpayers, there are changes in the deductibility of certain expenses. The tax deductibility of depreciation and rental costs for passenger cars is capped at CZK 2 million. Moreover, the scope for deducting costs for specific employee benefits provided to family members has been broadened, whereas the deductibility for still wine up to CZK 500 has been removed.
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Changes to Social Security Contributions: The introduction of a new sickness insurance contribution of 0.6% to be paid by employees from their wages will increase their total social security contributions from 6.5% to 7.1%. Self-employed individuals will also see an increase in their social security contribution rate from 50% to 55% of their income tax base, effectively raising their contributions by 10%.
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Real Property Tax: The real property tax is set to effectively increase to up to double the current amounts. This increase is part of a broader move to adjust taxes in line with inflation and real estate value changes.
These changes reflect a significant shift in the Czech Republic's tax policy, aiming at fiscal consolidation while attempting to balance the impact on both businesses and individuals.
Requirements for Candidates for Company Registration in the Czech Republic
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Passport
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No criminal record (required for certain activities, if applicable)
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Age requirements: Applicants must be 18 years of age or older
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Proof of qualifications: For some types of activities, it is necessary to provide evidence of professional qualifications or work experience
Timeframe for Registration of Company in the Czech Republic
The timeframe for registering a company in the Czech Republic can vary depending on several factors, such as the type of company you're registering, how quickly you can gather the required documents.
Typically, registering a limited liability company (s.r.o.), which is the most common type of company formation in the Czech Republic, involves these steps:
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Choosing a Business Name: You need to ensure the name is unique and not already in use.
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Bank Account Opening: Open a bank account in the name of the company and deposit the required starting capital.
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Gathering Necessary Documents: This includes the articles of association, proof of business address, and consents from the executive directors, among others.
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Notarization: Certain documents, like the articles of association, may need to be notarized.
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Registration with the Commercial Register: Submit the application and required documents to the Commercial Register via a notary.
The actual registration process with the Commercial Register is relatively quick, often taking about 5-7 business days after the submission of all required documents. However, preparing the documents, including gathering all necessary information, opening a bank account can extend the total time to several weeks. On average, the entire process from start to finish can take from 4 to 6 weeks, assuming there are no complications or delays in document preparation or submission.
Keep in mind that these timeframes are estimates and can vary. It's advisable to consult with our advisors to get precise and up-to-date information tailored to your specific situation.
Step-by-Step Procedure of Company Formation in the Czech Republic
Registering a company in the Czech Republic involves several key steps and requirements. Here's a condensed overview to guide you through the process:
Step 1: Decide on a Legal Structure
The Czech Republic offers various business structures, including Limited Liability Company (S.R.O), Limited Partnership (KS), General Partnership (VOS), Joint Stock Company (AS), Cooperative (Družstvo), Sole Proprietorship, Branch Office, and Representative Office. Your choice will depend on factors like the level of liability you're willing to accept, the number of shareholders, and the capital required.
Step 2: Obtain Necessary Records and Confirmations
The process begins with obtaining police (or criminal, if applicable) records for any future managing directors. It is essential to ensure that none of the business partners have outstanding tax obligations by obtaining confirmation from the revenue authority. Additionally, we will require authenticated statutory declarations and specimen signatures from all managing directors.
Step 3: Establish an Office
Having a physical or virtual office address is necessary for company formation. If you're purchasing property for your office, we will need the ownership documents.
Step 4: Prepare and Notarize Documents
We will create the founding documents of the partnership, which then must be verified by our notary. After that, our notary will notarize the company's statutory documents, such as the charter and the notarial deed.
Step 5: Register Your Company
The next step is to register your company with the Commercial Register, which involve filling in a special form with the Register Court or registering through our notary.
Step 6: Open a Corporate Bank Account
A corporate bank account is necessary for the initial deposit of capital and for future financial transactions of the company.
Remember, the company becomes a legal entity and can commence operations only after these steps are completed. It's also important to maintain accurate bookkeeping and comply with tax and commercial registration obligations from the onset.
For detailed guidance and assistance, consulting with our professionals who specialize in company registration in the Czech Republic can be very helpful. This ensures that all legal requirements are met and can help avoid potential pitfalls during the registration process.
What is Necessary after the Company Registration in Czechia
For a more detailed understanding, let's delve deeper into some of the key obligations and considerations for a business after its registration in the Czech Republic:
Tax Registration and Compliance:
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Income Tax: Companies must register for corporate income tax and file annual tax returns with the financial office.
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Value-Added Tax (VAT): If your company's turnover exceeds CZK 2,000,000 within 12 consecutive months, you must register for VAT. The standard VAT rate is 21%, with reduced rates for certain goods and services. Regular VAT returns, usually monthly or quarterly, are required.
Social Security and Health Insurance Contributions:
Employers and self-employed individuals are required to contribute to both social security and public health insurance for themselves and their employees. These contributions cover pensions, sickness benefits, and healthcare services.
Employment Regulations:
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Contracts: Employment contracts must comply with Czech labor laws, specifying terms such as salary, job description, and notice periods.
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Working Conditions: Employers are responsible for ensuring safe working conditions and adherence to working hours regulations.
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Employee Benefits: Familiarize yourself with mandatory benefits, including holiday entitlement, sick leave, and parental leave.
Accounting and Financial Reporting:
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Accounting Standards: Businesses must maintain their accounts according to Czech accounting standards, which require keeping detailed records of all financial transactions.
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Financial Statements: Annually, companies need to prepare financial statements, including a balance sheet, income statement, and notes. These must be filed with the Commercial Register and the tax authority.
Data Protection:
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GDPR Compliance: If processing personal data, companies must comply with GDPR, requiring measures to protect data and respect individuals' rights.
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Data Processing Records: Companies should keep detailed records of data processing activities and have clear privacy policies in place.
Specific Industry Regulations:
Depending on the industry, there may be additional regulatory requirements, such as food safety licenses for restaurants or environmental permits for manufacturing plants. It’s crucial to comply with any industry-specific regulations.
Insurance:
Beyond mandatory insurance (such as social security and health insurance), consider obtaining liability insurance, property insurance, and any other relevant insurance policies to protect your business against potential risks.
Legal and Regulatory Updates:
Laws and regulations can change, impacting tax, employment, environmental standards, and industry-specific rules. Stay informed about legal updates to remain compliant.
Professional Assistance:
Given the complexity of legal and financial regulations, it's advisable to seek ongoing advice from our tax advisors, legal experts, and accountants specialized in Czech business law. This ensures not only compliance but also strategic planning for tax efficiency and legal protection.
Navigating the post-registration landscape in the Czech Republic involves a comprehensive approach to legal compliance, financial management, and strategic planning. Being proactive and informed about your obligations can significantly contribute to the smooth operation and success of your business.
Data Box (Datová Schránka)
The executive of the newly established Czech company will be provided with the access credentials for the Data Box. The Czech Data Box (Datová Schránka) system represents a cornerstone in the Czech Republic's e-Government initiative, aiming to modernize and secure interactions between the state, businesses, and citizens. Its implementation has significantly impacted how administrative, legal, and official communications are handled, promoting efficiency and transparency. Below are more detailed aspects and functionalities of the Data Box system:
Advanced Functionalities
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Time Stamps: Each document sent or received via a Data Box is timestamped, providing an official record of when the document was transmitted. This feature is crucial for deadlines and legal proceedings.
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Delivery Reports: The system generates automatic delivery reports, confirming when a document has been delivered and accessed by the recipient. This is particularly useful for legal and administrative processes, where proof of delivery is essential.
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Bulk Sending: Entities, especially governmental ones, can send documents in bulk to multiple recipients. This feature streamlines mass communication needs such as notifications, updates, and informational campaigns.
Integration with Other Systems
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The Data Box system is integrated with other e-Government services in the Czech Republic, such as the Public Administration Information System (ISVS) and the CzechPOINT network, facilitating seamless digital workflows across different platforms and services.
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It supports integration with third-party software through an API (Application Programming Interface), allowing businesses to incorporate Data Box functionalities directly into their internal systems for more efficient document management and processing.
Security Measures
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The system employs advanced security protocols, including SSL/TLS encryption for data in transit and robust authentication mechanisms for users to ensure that only authorized individuals can access the Data Box.
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Regular security audits and updates are performed to safeguard against new vulnerabilities and ensure the integrity and confidentiality of the communications.
Accessibility and Support
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The Czech government provides comprehensive support for Data Box users, including detailed guides, FAQs, and a helpdesk to assist with technical issues or questions about the system.
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Efforts have been made to ensure the Data Box system is accessible to users with disabilities, including compatibility with screen readers and other assistive technologies.
Legal Framework
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The legal basis for the Data Box system is established in Czech law, which outlines the rights and obligations of users, the operational standards for the system, and the legal validity of electronic documents exchanged through Data Boxes.
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The legislation ensures that documents exchanged via Data Boxes meet all requirements for official communications, including those related to legal proceedings, tax matters, and administrative processes.
The Data Box system exemplifies the potential of digital technologies to transform public administration, making it more efficient, secure, and user-friendly. Its ongoing development and integration with other digital services highlight the Czech Republic's commitment to leveraging technology to improve governmental operations and citizen engagement.