Company Registration in Czech Republic

Company Registration in the Czech Republic

The Czech Republic is situated in Central Europe. The country shares a border with Poland in the north, with Germany - in the northwest and the west, with Austria - in the south, and with Slovakia - in the east. Prague is the capital of the Czech Republic the country's largest city and the most important tourist attraction.

The Czech Republic has been a member of NATO starting from 1999, and also a member of the European Union since 2004.

Nowadays, registration of business in the Czech Republic is the legal and the most affordable way to obtain a residence permit in the Czech Republic in the future, as well as to acquire leasing for car or mortgage for real estate.

Benefits of Doing Business in the Czech Republic

Located in the center of Europe, the Czech Republic acts as a gateway to both the eastern and the western markets. The place is less than 2 hours by air from most European countries.
As a member of the EU, any company in the Czech Republic benefits from the country’s trade relationships and commercial ties with most of the business centers in the world. In addition, the country is bereft of a majority of trade burdens.
There is no dearth of the literate, skilled, and professional workforce in the country, so employability standards are conducive to business operation.
The Czech Republic shows a high degree of entrepreneurship and favorable conditions for doing business.
The country features high standards of living, a vibrant economy, and a refreshingly aesthetic landscape.

In order to register a company in the Czech Republic, the potential owner shall usually go through the following stages:

- verification of the name of the future company;
- certificate on absence of a previous criminal record, translated into Czech;
- obtaining legal address (initial one) for 1 year;
- opening a bank account;
- preparation of the necessary constituent documents;
- payment of state fees;
- notarized Memorandum of Association;
- registration of a company in the commercial court and the financial authority;
- processing seal of the future company.

How to Register a Company in the Czech Republic?

The process of company formation in the Czech Republic is as follows:

1. Decide a Company Name

Business name registration in the Czech Republic is subject to availability and acceptability. The proposed company name can be checked with the Registry of the Regional Commercial Court.

2. Provide Criminal Record Clearance

Arrange for certificates of a clear criminal record of the managers [an extract from the Criminal Register from their country of origin – for EU citizens; or an extract from the Criminal Register of the country where one has spent at least 3 consecutive months in the 3 previous years – for non-EU citizens].

3. Provide Real Estate Register Clearance

Submit proof of the registered office of the company.

4. Advance the Minimum Share Capital

During company incorporation, the minimum share capital, if any, must be placed in a bank.

5. Obtain Trade License and Clearances

Depending upon the type of activity your company would be engaging in, file for the required trade licenses and permits.

6. Get the Articles of Association Notarized

Draft the Articles of Association (AOA) of the company, and get them, as well as company statutes, verified by a public notary in the Czech Republic.

7. Register Your Company at the Commercial Register

To complete the registration process, get the motion to the relevant Regional Court signed by all the first managers in front of a notary public, and then submit it at the Companies Registry.

8. Get a Tax Identification Number

Registration for income tax happens simultaneously, and a company receives its Tax Identification Number on submission of the company application.

Documents Required for Company Registration in the Czech Republic

Company business name
Address of registered office, along with its proof (lease agreement)
Details of the activities to be carried out by the company
Memorandum and Articles of Association (MAA)
Trade authorization certificate
Specimen signatures of shareholders and directors
Proof of deposited bank capital
Extract from the Criminal Registry for each member of the company

What are the main requirements for company formation in the Czech Republic?

The company set up in the Czech Republic has to be registered with the Trade License Office and this is a compulsory requirement for company formation in the Czech Republic. To obtain the trade license, the following documents are required when starting a company in the Czech Republic:

• the statutory document for companies that have not yet been registered with the Commercial Register;

• the excerpt from the Register – this is applicable for companies that have already been established;

• the lease agreement of the office space, which shows that the company has an official business address;

• the payment proof of the administrative fee, imposed to all companies requiring this service.

In no more than 90 days since the company was set up or the trade license was released, the businessmen must register with the Commercial Register of the Regional Commercial Court. Along with the standard application for company formation in the Czech Republic, the founders must submit:

the articles of association – the main statutory documents of a business set up in the Czech Republic;
documents attesting the right to develop business activities on the Czech Republic territory;
confirmation from the administrator of the registered capital and an extract from the Trade Licenses Register;
a certificate from the bank stating the deposited capital, which can vary depending on the company’s business form;
a list with the company managers and their signature and consent for the registration into the Commercial Register;
clean criminal records for all representatives and members of the company registered here.

The owners must submit an application at the Tax Office for the income tax, withholding tax, and payroll tax registration and for the VAT registration no later than 15 days since the company was registered. As a result, the newly formed entity will receive a tax identification number. The last step of incorporation is the registration for social security and health insurance, within eight days after the first employee was hired.

Types of companies

S.R.O. company formation in the Czech Republic. Main information

The duration of the company's operation is not limited. It is possible to strike off the company only according to the court decision.
The annual report is submitted by the company once per year until March 31 of the following year and given a large turnover - quarterly.
The director can be the founder of the company.
The number of founders ranges from 1 to 50 people. As a rule, the founders are adult members of the family and folks.
According to the law, the director cannot have a work permit in the company but work there according to the contract as the natural person who has concluded the agreement with his company.
The number of directors is unlimited. The director has the right to independently resolve any issue concerning his company unless otherwise provided by the charter.
It is necessary to contribute the authorized capital to the bank. The amount of it is not limited and can start from 50 euros. When registering, it is possible to contribute 50% of the authorized capital. The remaining part should be paid within 5 years.
The term of the company registration in the Czech Republic is usually 15-20 working days from the date of submission of all required documents from the founders.

A.S. company registration in the Czech Republic

The primary capital of the company is divided into the number of shares which determine the rights of shareholders.
There are no restrictions on the number of founders, and the foreign citizens can be in the composition of the company.
The minimum authorized capital equals 2 000 000 korunas. There is no upper limit.
The managing bodies include The Board of Directors, the Supervisory Board, the General Meeting of Shareholders, and the Directors.
Legal regulation of the company’s activities is conducted on the basis of the relevant sections of the Commercial Code.
The name of the joint-stock company usually contains the abbreviations "AKC. spol." or "A.S.".
The shareholders are not liable for the obligations. Their damages from the activities of the company are determined by the value of their shares.
The Board of Directors shall consist of at least three people. The participants of the Board should be registered with the Trade Register, where all changes to the Council are recorded. The participants of the Board are elected or recalled by decision of the general meeting of shareholders

Limited Partnership (k.s.)

A KS is a company in which all partners are liable for the company’s obligation up to the number of their contributions as disclosed in the Commercial Register, paid or unpaid. The Czech limited liability company (Spolecnost s Rucenim Omezenym-SRO) is usually preferred for small and medium-sized businesses and it is a popular legal entity, due to its requirements. It can be established either by one founder (person or legal entity) or by an association of a maximum of 50 persons. An SRO with a single shareholder can’t set up or be the sole shareholder of another SRO. At the same time, one individual can be the sole shareholder of only three other limited liability companies.

Joint Stock Company (a.s.)

A founding contract, including the company’s statutes, and an issue of shares establish an AS. Shares can be freely traded without registration in the Czech Republic’s Commercial Register, which makes it attractive if you plan to make your company publicly traded. A Joint Stock Company must have a minimum capital stock of CZK 2 million. At least 30% of that amount must be paid at the time of incorporation.

Setting up a joint-stock company (Akciova Spolecnost-AS) requires at least two shareholders or one corporate body, a managing board that is controlled by a supervisory council and must have a local address. There is also a demand for a higher minimum share capital - CZK 2 million (in the case of a private joint-stock company) - and this is the reason why it is generally chosen by large companies. In case the company is set up through a public offer of shares, the capital required is CZK 20 million.

How to open a bank account in the Czech Republic?

Each company with establishments in the Czech Republic needs to open a bank account by providing the firm’s main documents, like the Articles of Association. First, a provisory bank account is opened for depositing the minimum share capital, and then a permanent bank account will serve the company’s financial operations. One must observe the banks' fees at the time of registration. Support can be offered in this matter by our Czech lawyers who can also help you register the company for VAT.

Licenses and permits for your business in the Czech Republic

The legal right of commencing and developing a series of activities in the Czech Republic is made with the help of special licenses and permits issued by the entitled authorities. For example, the Czech Trade Office accepts the applications of those entrepreneurs wanting to start a business in the trading field. As for those interested in the construction sector, they have to apply for a license with the Environmental Department and several other local institutions. Also, the Road Management Agency issues the type of permits and licenses for properties that must connect with the road system in the chosen city for construction. All the legal aspects of licenses and permits in the Czech Republic should be attentively measured, therefore, it is suggested to talk to our team of lawyers. they can also help you with VAT registration in this country.

The Czech economy relies on several economic sectors. In this sense, it is important to know that the main sectors are represented by the automotive, machinery and electronics, airplane industry, life sciences, and IT – these being the key economic sectors of the country. However, it is important to know that relevant business prospects can be obtained in other fields, such as software development and information technologies

Types of companies	Limited Liability Company Joint Stock Company Branch (Subsidiary)
Minimum share capital for LTD Company	1 CZK (0,039 Euro)
Minimum number of shareholders for Limited Company	1
Time frame for the incorporation	2-5 days
Corporate tax rate	19%
Dividend tax rate	15%
VAT Rate	21%
Are Shelf Companies Available?	Yes
Do you supply a Registered Address/Virtual Office?	Yes
Local Director Required	No
Annual Meeting Required	No
Redomiciliation Permitted	No
Electronic Signature	No
Is Accounting/Annual Return Required?	Yes
Foreign-Ownership Allowed	Yes
Any tax exemptions available?	Yes (according to the business activity)

Updated on : Wednesday , January 17th , 2024