The Czech Republic is a robust economy in Europe and of the prominent jurisdictions in its area. On a regular basis, it brings in several foreign investments from various countries, its primary trading partners being other European countries. Foreign businessmen who wish to open a company in the Czech Republic should understand the following:
Why to start your Czech business in Prague?
Setting up a business in Prague implies living and working in one of Europe’s most wonderful cities. The Prague business community is stimulating and diverse and includes employees from every corner of the world, working side by side.
As the capital of the Czech Republic, the city of Prague has long stood as a significant gateway to Europe, and if you’re thinking about setting up or expanding your company in Europe, there are a ton of reasons to make Prague your business home.
- Gateway to Europe: as the capital of the Czech Republic, Prague is situated in the heart of Europe and is a continental gateway. The Czech Republic’s European Union membership gives Prague’s businesses beneficial logistical advantages.
- Workforce Benefits: beyond its logistical benefits, Prague is also a center for the Czech Republic’s most talented employees, so businesses in the city attracts from a diverse, skilled, and well-educated labor pool.
- Economic Potential: the Czech Republic has exhibited remarkable stability to the violent international economic climate, thanks in part to its opinion not to adopt the Euro, and instead maintain the Czech Koruna. As a capital city, Prague gains directly from that economic strength, granting businesses a chance to partake in stable, healthy local and national economies.
- The Set-up Procedure: for new businesses, setting up in Prague is a reasonably smooth and user-friendly procedure.
Step-by-step process for setting up your business in Prague
Selecting your type of Czech Company:
Once the conclusion to open a business in the Czech Republic has been made by an entrepreneur, the legal form of business must be categorized. The primary options are:
- self-employed business license (živnostníci),
- limited liability company (S.R.O./ společnost s ručením omezeným) or
- joint stock company (A.S./ akciová společnost).
Extra choices for starting a company or opening a franchise are commercial and limited partnerships.
This article will focus primarily on the establishment of a limited liability company(LLC or SRO in Czech) since this legal form is most generally used when establishing businesses in the Czech Republic.
Establishing a limited liability company in the Czech Republic
The process includes the following steps:
- Acquiring the Memorandum of Association/Foundation Deed by the Notary Public
- Arranging permission for the provision of the company’s registered office address
- Registering the essential trade licenses
- Opening a bank account for contribution payments
- Registration of the company in the Commercial Register of the competent District Court
It is highly recommended to utilize the services of a company specializing in the establishment of businesses in the Czech Republic in order to receive help in fulfilling Czech legal regulations.
The main taxes available for Czech companies
- Company Tax: the corporate income tax in the Czech Republic is put at the standard rate of 19%. Company tax issues must be settled within 30 days of a company being registered in the Czech Republic.
- Value Added Tax (VAT): the VAT in the Czech Republic is assigned at the standard rate of 21%, but companies can also profit from lower VAT rates, assigned at rates of 15% and 10%.
- Road Tax: this is a tax unique to the Czech Republic. If a company plans to use vehicles for business objectives it must pay a road tax.
- Personal Tax Rates: a business employing non-citizens should evaluate the issue of residency for the purposes of income tax. A non-citizen who
is in the Czech Republic for less than 180 days will pay income tax to his/her native country and will be obligated to pay tax to the Czech Republic exclusively for base income.
- Approval for non-EU citizens: tourists who want to stay in the Czech Republic for more than 90 days have to submit a long-term visa request. If the individual making the request is not an EU citizen he/she must also apply for an employment visa.
Obligations after registration of your Czech company
- Ultimate Beneficial Owner registration: businesses must register their beneficial owners in the Register of Beneficial Owners without unnecessary delay once the company is duly incorporated.
- Insurance registration: employers must inform the competent office of the Czech Social Security Administration of the date of opening or termination of an employment relationship within 8 days of it occurring.
- Opening a bank account: a company must open a current bank account after its registration.
With a vast system of organizations, opportunity is all over the place. As such, the Czech Republic is acknowledged as the optimal business environment for foreign individuals.
If you’re ready to register your company in the Czech Republic, let’s go ahead and contact your Damalion expert now.
