Company Formation Czech Republic
Updated on Tuesday 04th June 2019
Rate this article based on 6 reviews
BridgeWest offers company incorporation services in the Czech Republic. Businessmen who want to open a company in Czech Republic can receive assistance on a wide range of matters concerning the incorporation procedure available in this country. Some of the main services provided by our team of consultants in offshore company formation are presented below:
BridgeWest can assist investors in registering one of the Czech legal entities, prescribed under the country’s national legislation. However, just like in the case of other European countries, the most common way to start a company in the Czech Republic is by registering a limited liability company, known as spolecnost s rucenim omezenym - SRO.
The Czech limited liability company requires at least one and maximum 50 shareholders and a director and it must have a registered office. The minimum share capital for this type of company is CZK 1; our team of consultants in offshore company set up can offer more details on other characteristics available for this business structure.
Another common way to start a business in the Czech Republic is by incorporating the akciova spolecnost - AS, which designates the joint stock company. The Czech joint stock company must have at least two shareholders and one director, a management board and a supervisory board. It must also have a registered office. The minimum share capital for a joint stock company is CZK 2,000,000 .
Foreign businessmen can also register a Czech branch, subsidiary or representative office. Foreign companies are allowed to open branch offices or representative offices in the Czech Republic. They can be opened as separate legal entities or extensions of the parent company in the Czech Republic.
According to the Czech laws, the executive of a company must present a criminal record not older than three months, while special requirements are enabled for non-EU citizens wanting to open a company in the Czech Republic. Our team of specialists at Bridgewest can offer further information on the requirements imposed to foreign businessmen.
The incorporation of a business in the Czech Republic starts by drafting the statutory documents, a phase that is known as establishment. The incorporation documents of a Czech company can differ, based on the selected legal entity. As a general rule, businesses are incorporated based on a memorandum of association; however, in the case of a limited liability company, it is also necessary to prepare a notarial deed.
The notarial deed is drafted and signed in front of a public notary in the Czech Republic, a procedure that requests the payment of a fee. The fees associated with the notarial procedures are established under the Regulation of the Ministry of Justice No. 196/2001 Coll., Notarial Tariff.
Once the incorporation documents are prepared, the company needs to be registered with the local institutions. The first institution where a company needs to register is the Commercial Register, the main body that keeps a record on all the companies registered in the Czech Republic. The institution operates under the Register Courts and when filling the application for registration, the investors will also need to pay a court fee.
Please note that the application to register with the Commercial Registry must be done in a period of maximum six months since the incorporation documents were signed. If not, the statutory documents will no longer be considered valid under the local legislation. After the founders have submitted their documents with the Commercial Registry and after the institution registered the document, several procedures have to completed.
Thus, from the day the company is recognized by the Commercial Registry, the investors have to register the company with the District Social Security Administration (provided that the company has employees) in maximum eight days. The same period of time is also applicable for the registration with the local health insurance companies. A longer period of time - 15 days - is available for the registration with the Czech tax institutions. Our team of specialists in offshore incorporation may assist with advice on the tax registration procedures.
- drawing up the articles of association that can be signed through power of attorney (Czech laws require powers of attorney for any public notary proceedings);
- drawing up documents for company incorporation in Czech Republic, such as specimen signatures, identification papers copies, application form required by the Company Registration Office;
- arranging public notary proceedings (all procedures for company incorporation are done in front of a Czech public notary);
- providing a registered office in the Czech Republic on demand (the registered office serves as headquarters for the company in the Czech Republic and it will be made public);
- setting up a bank account for the company in the Czech Republic - BridgeWest will help you in setting up the share capital bank account, as well as a current bank account once the company is incorporated;
- recommending a Czech accountant, as accounting services are needed for new businesses.
What are the main company types in Czech Republic?
BridgeWest can assist investors in registering one of the Czech legal entities, prescribed under the country’s national legislation. However, just like in the case of other European countries, the most common way to start a company in the Czech Republic is by registering a limited liability company, known as spolecnost s rucenim omezenym - SRO.
The Czech limited liability company requires at least one and maximum 50 shareholders and a director and it must have a registered office. The minimum share capital for this type of company is CZK 1; our team of consultants in offshore company set up can offer more details on other characteristics available for this business structure.
Another common way to start a business in the Czech Republic is by incorporating the akciova spolecnost - AS, which designates the joint stock company. The Czech joint stock company must have at least two shareholders and one director, a management board and a supervisory board. It must also have a registered office. The minimum share capital for a joint stock company is CZK 2,000,000 .
Foreign businessmen can also register a Czech branch, subsidiary or representative office. Foreign companies are allowed to open branch offices or representative offices in the Czech Republic. They can be opened as separate legal entities or extensions of the parent company in the Czech Republic.
Businessmen interested in opening a Czech business may also register one of the following:
- general commercial partnership - it must be set up by at least two partners, who are liable for the partnership’s debts in accordance with their capital contributions;
- limited partnership – it is formed by minimum two partners, one registered as a limited partner, and one as a general partner;
- cooperative – it is founded by at least three members, who are not held liable against the company’s debts;
- joint venture – it can take the form of any of the legal entities available in the Czech Republic and it is founded based on the association of at least two businesses, with the purpose of accomplishing a specific project.
- sole trader – it can be set up by a single founder, who is personally responsible for the debts of the company.
According to the Czech laws, the executive of a company must present a criminal record not older than three months, while special requirements are enabled for non-EU citizens wanting to open a company in the Czech Republic. Our team of specialists at Bridgewest can offer further information on the requirements imposed to foreign businessmen.
What is the incorporation procedure in the Czech Republic?
The incorporation of a business in the Czech Republic starts by drafting the statutory documents, a phase that is known as establishment. The incorporation documents of a Czech company can differ, based on the selected legal entity. As a general rule, businesses are incorporated based on a memorandum of association; however, in the case of a limited liability company, it is also necessary to prepare a notarial deed.
The notarial deed is drafted and signed in front of a public notary in the Czech Republic, a procedure that requests the payment of a fee. The fees associated with the notarial procedures are established under the Regulation of the Ministry of Justice No. 196/2001 Coll., Notarial Tariff.
Once the incorporation documents are prepared, the company needs to be registered with the local institutions. The first institution where a company needs to register is the Commercial Register, the main body that keeps a record on all the companies registered in the Czech Republic. The institution operates under the Register Courts and when filling the application for registration, the investors will also need to pay a court fee.
Please note that the application to register with the Commercial Registry must be done in a period of maximum six months since the incorporation documents were signed. If not, the statutory documents will no longer be considered valid under the local legislation. After the founders have submitted their documents with the Commercial Registry and after the institution registered the document, several procedures have to completed.
Thus, from the day the company is recognized by the Commercial Registry, the investors have to register the company with the District Social Security Administration (provided that the company has employees) in maximum eight days. The same period of time is also applicable for the registration with the local health insurance companies. A longer period of time - 15 days - is available for the registration with the Czech tax institutions. Our team of specialists in offshore incorporation may assist with advice on the tax registration procedures.
Czech Republic key facts
Investors can start the procedure of offshore company formation in jurisdictions that provide competitive characteristics. In the case of Czech Republic, the country benefits from a well-educated workforce, it has a stable political and economic environment and it is a member state of the European Union (EU).
The country has very well developed economic ties with other European countries, such as the Netherlands, Germany, Luxembourg, Austria and France, these countries being some of the main investors in the Czech Republic. Those interested in opening a company in Czech Republic must also know that the main economic sectors in which foreign investors prefer to invest are the following: manufacturing, financial sector, insurance, real estate, information and communication. Related to the company type preferred by foreign businessmen, it is necessary to know that the limited liability company and the joint stock company are selected for incorporation in this country; our specialists in offshore company set up can provide advice on the legal entities available for investors.
The standard VAT rate in the Czech Republic is 21% and a reduced rate of 15% applies to certain products and services. The corporate tax in the Czech Republic is 19%. BridgeWest is also able to offer ready-made Czech companies and VAT registration. Please contact us for more information and prices regarding opening a company in Czech Republic. Our specialists can also help businessmen in opening an offshore bank account.