In 2021, the Czech Republic took 30th place among 190 countries of the world in the rating "Favorable conditions for doing business" (data from the Doing business agency). The country's economy is actively developing and attracting investors from around the world. If you are engaged in entrepreneurship and want to expand your business, you will be interested to know how you can open a business in the Czech Republic.
Why is it profitable to do business in the Czech Republic
In the Czech Republic, there are no restrictions for foreign citizens to start a business. Foreign entrepreneurs enjoy the same rights and conditions for doing business as Czech citizens.
The Czech Republic, as an EU member state, offers many benefits for business people. Private enterprises are very common here, the legal framework for entrepreneurial activity is comfortable and transparent, so it is not difficult to create and register a company. The level of corruption and crime is low, the taxation system is loyal. It is easy to get a loan from the bank for the development of an enterprise, and the loan rates are low.
The fact that the Czech Republic belongs to the Schengen zone makes it possible to cooperate with suppliers and customers from other countries of the European Union, receive subsidies and benefits, and use European investment programs.
Neighborhood with Germany, Austria, Poland, Slovakia significantly expands the potential market for goods and services.
A foreign owner of a company in the Czech Republic can apply for a long-term visa, and in the long term - a residence permit and Czech citizenship.
Business formats
Various forms of entrepreneurial activity are widespread in the Czech Republic. You can act as a private entrepreneur, open a cooperative or public trading enterprise, register a limited liability company (LLC) or joint stock company (JSC).
According to Czech law, an LLC can have only one founder, this greatly facilitates the initial stage of entrepreneurial activity.
If you want to open your own business in the Czech Republic or you have a business in Russia and you are planning to establish a representative office of your company in this country, then the first step should be to register an enterprise.
How to register a company yourself
To open a business in the Czech Republic, you need to meet the following requirements:
- Over 18 years of age.
- Legal capacity.
- No criminal record and no debt to tax authorities.
- Profile education and confirmation of qualifications in the chosen industry (for activities that are subject to licensing in the Czech Republic).
The requirements for Russians who are going to open a business in the Czech Republic are the same as for citizens of the Czech Republic.
The business registration program in the Czech Republic can be divided into preparatory and main stages. First you need:
- Choose a field of activity. Some types of business in the Czech Republic require licensing, others can be done without a license. Sometimes certain conditions must be met to obtain a license. For example, tour operators need to have higher specialized education and work experience in this area for at least 6 years. If you do not meet the required requirements, you will have to find a co-founder or director who has the necessary education and experience.
- Choose a name for the company. It must be unique and not coincide with the names of existing Czech companies. You can check the originality of the name for free on the Overovac.cz website. 3-4 options are submitted for approval.
- Choose the legal address of the company. If you have a house or apartment in the Czech Republic, you can register a company at your home address. If not, you can use your rented house, apartment or production facility as the legal address. This requires the owner's notarized consent. In the Czech Republic, the services of renting a legal address are provided, it will cost 200-800 euros for one year.
- Decide on the separation of powers. Any company must have a founder (společník) and a director (jednatel). When opening a private enterprise or a limited liability company, one person can be the founder and at the same time the director. The company is allowed to have from 1 to 50 founders with different shares of the contributed start-up capital and several directors (depending on the production need).
- Determine the size of the authorized capital. Since 2021, a law has been passed in the Czech Republic, according to which a company with one founder can have an authorized capital of 1 kroon or more. But if you really want to do business and count on a serious attitude towards yourself, the size of the authorized capital must correspond to the type of activity. A company is considered trustworthy if its share capital is at least CZK 100,000 (EUR 3,850).
The main stage of registration:
- Register the company with a notary (Notářský zápis). The cost of the service is about 3000-4000 CZK.
- Register a company with the Business Administration. (živnostenský úřad).
- Open a temporary bank account and deposit the authorized capital into it. After the registration of the company is approved by the Commercial Court, the temporary account is closed and a permanent one is opened.
- Submit documents for company registration to the City Commercial Court (Městský soud).
- Register a company with the Tax Office (Finanční úřad). To do this, you must contact the territorial office at the place of your legal address. The term for consideration of the application is 7-14 days. Your company will receive an individual taxpayer legal entity number.
If you are both a founder and a director of a company, you need to draw up documents that will allow you to perform the duties of a director in your own company. This can be done with the help of a contract or by applying for a job as an employee.
If you hire employees (including yourself) for the company, you must register with the Social Security Administration as an employer and take out health insurance for your employees.
Documents required to register a business in the Czech Republic
To register a company with a notary, you will need the following documents:
- Copies of passports of all founders and directors (for foreigners - foreign passports and the page of the national passport, which indicates the registration address at the permanent place of residence).
- Police clearance certificates for founders and directors (výpis z rejstříku trestů). Foreign applicants must obtain a certificate in their home country no more than 2 months before being presented to a notary. In the Czech Republic, it will need to be translated into Czech and certified by a court interpreter. In addition, it is necessary, on the basis of a copy of the birth certificate, to obtain a certificate of no criminal record on the territory of the Czech Republic.
- A statement from each director of the company (čestné prohlášení jednatele a souhlas se zápisem do obchodního rejstříku) with consent to be entered in the commercial register.
- The consent of the owner of the premises that you rent for the registration of the legal address of the company (souhlas vlastníka s umístěním sídla). If you yourself are the owner of real estate, then draw up this document on your own behalf. The application is written in free form and certified by a notary.
- Request for registration in the commercial register (návrh na zápis do obchodního rejstříku). To submit it, you need to go to the website, fill out an electronic form, print it, sign and certify the signature with a notary.
- Application for depositing the amount of starting capital (prohlášení správce vkladu).
- List of the statutory types of activity of the firm.
Based on the submitted documents, the notary will issue you a notarial deed (notářský zápis).The document specifies the founders and directors of the company, the monetary contribution of each of them and other issues related to the activities of the company. Registration takes no more than 1 business day and costs from 3000 to 4000 CZK (115-154 euros).
To register a company with the Business Administration (živnostenský úřad), you must provide:
- Passport.
- Notarial deed (notářský zápis).
- Consent of the owner of the property who provides the legal address (souhlas vlastníka s umístěním sídla).
- If running a business that you plan to do requires licensing, you need to provide originals and copies of documents that confirm your qualifications and work experience (diplomas, certificates of completion of training courses, certificates of work in this area, etc.). A big plus will be documents that confirm the history of your successful entrepreneurship in the past.
The fee is 1000 CZK, registration is done within 5-7 days.
To open an account with a Czech bank and deposit the authorized capital, you must have your passport and a copy of the title deed with you. The bank will give you a certificate for the Merchant Court.
To register a company with the Commercial Court, you must bring:
- all documents that you provided to the notary,
- notarial deed (notářský zápis),
- certificate of registration with the Business Administration (výpis z živnostenského rejstříku),
- a certificate from the bank on the contribution of the authorized capital,
- a receipt confirming the payment of the court fee (6,000 kroons).
Consideration of the application is carried out within 7-10 days.
Registration of a company in the Tax Office and the Register of Employers, registration of health insurance for employees is done online and does not require a lot of time.
Opening a company in the Czech Republic takes about 20 days.
The annual report is submitted to the Internal Revenue Service by March 31st. You must post the scans of the report on the Justice.cz website. Failure to comply with this requirement will incur heavy fines.
When the registration of the company is completed, you can apply for a long-term business visa to the Czech Republic (type D). It allows you to stay in the Czech Republic for more than 90 days.
When the visa expires, you can get a residence permit in the Czech Republic for a period of 2 years.
After 5 years of living in the Czech Republic, you have the right to obtain a permanent residence permit (permanent residence in the Czech Republic), and after another 5 years - Czech citizenship.
Purchase of a company in the Czech Republic
If you do not like bureaucratic procedures or live outside the Czech Republic, you can entrust the opening of a company to an intermediary company. You provide the dealer with a power of attorney, all the necessary documents and instructions regarding the charter of the future enterprise, and after 3 weeks you receive a company registered in your name.
In addition, you can buy an already open and registered company that has a legal address, registered capital and is entered in the Czech tax register. When re-registering a company, you can change its name, registered activities, founders and directors. The renewal period is about 10 days.
What taxes are paid in the Czech Republic
Czech taxation follows a common European pattern. The main types of taxes in the Czech Republic:
- Income tax. The base rate is 19%. For investment funds, a reduced rate (5%) can be used.
- Income tax. Charged on any individual income at a rate of 15%. A tax return must be submitted not only to Czech citizens, but also to foreigners if they have spent more than 183 days in the Czech Republic (continuously or intermittently). Tax is charged if your total annual income exceeds 15 thousand kroons (577 euros).
- VAT. The base rate is 21%, the reduced rate is 15 or 10%. Reduced rates are used if you produce food, medical equipment for the disabled, child seats, pharmaceuticals, books. Certain types of medical and other services are exempted from VAT.
- Environmental tax.
- Property tax.
- Excise duty (on excisable goods).
- Transport tax.
What business is profitable to do in the Czech Republic
Tourist service is one of the most popular destinations for foreign entrepreneurs. Travelers can be provided with accommodation services (hotels, family pensions), food (cafes and restaurants), organize excursions around the country (travel agencies), sell souvenirs.
Among the guests of the Czech Republic are in demand for car rental, taxi and transfer services, organization of leisure (clubs, entertainment), fitness and the beauty industry. Tourists coming from Russia willingly turn to the firms of their compatriots, where they are served in their native language.
But it should be borne in mind that the level of profitability of this type of business directly depends on its location. The tourist business in Prague and other large cities is always profitable, but incomes in the periphery may turn out to be small.
The Czech Republic produces high-quality and inexpensive goods that can be profitably exported to other countries.
Czech and European cars are popular in Russia, Czech glass art products are in demand in European countries.
Importing goods to the Czech Republic will also allow you to make good profits if you are able to offer something useful and original with the prospect of expanding not only to the Czech Republic, but also to neighboring countries.
Conclusion
Doing business in the Czech Republic is profitable and convenient. This country has created favorable conditions for private entrepreneurship, and the size of the authorized capital is the lowest in Europe - only 1 crown. You can register a company on your own in 3 weeks by spending 420-500 euros. You can also buy an already open company, spending 10 days on its re-registration. Prices are for August 2021.
