Czech Republic Summary Guide

Business Forms in Czech Republic

All new incorporated entities wishing to trade in the Czech Republic must be registered in the Companies Register. The courts maintain the register and until a company has been granted the required legal status, it cannot commence trading. An entry in the Companies Register must include specific information about the name and type of the business entity. Mandatory audits are required for companies that exceed certain turnover thresholds. More detailed information is shown below about the legal requirements for each type of company.

The most common forms of company in the Czech Republic are a Sole Proprietor holding a Trade Licence, Limited Liability Company (SRO), Joint Stock Company (AS), General Partnership, Limited Partnership or a Branch Office, with the first two options likely to be of most interest to small businesses and entrepreneurs.

For self-employed or sole trading (FO) individuals or small businesses, including family businesses, a Trade Licence should be obtained. For EU citizens, this licence can be obtained very easily – only evidence of residential address and personal ID is required. The licence is usually issued within three days. Self-employed individuals must also register a business name (if appropriate) and register for tax, social security and health insurance.

There is no charge for registering for the aforementioned taxes and insurance, although if a company name is required, there is a fee of CZK5,000 to register the name at the Register of the Commercial Court.

An individual seeking to start a small to medium sized business with no trading business name can commence activities as soon as the Trade Licence and mandatory registration procedures have been completed.

A General Partnership may be formed by two or more individuals (or other legal entities). Partners are liable for the debts of the partnership, and for tax on their share of the profits and a partnership agreement should be drawn up. Details of the partners must be recorded in the Commercial Register.

A Limited Liability Company (SRO) exists as a separate entity from its shareholders, who in turn have no liability for the company’s debts. An Executive responsible for the management of the company runs the company. Details of shareholders’ contributions must be recorded in the Commercial Register.

The law states that an SRO may have between one and fifty members. The Commercial Register must also show the amount of registered capital per shareholder. A minimum of CZK200,000 in registered capital is required with a minimum of CZK20,000 per shareholder. A trade licence must be obtained from the Trade Licence Office and the Memorandum of Association must be made available.

Profits of Limited Liability Companies are taxed under the corporate income tax regime.

A Joint-Stock Company (AS) has registered share capital and is run by a Board of Directors and a Supervisory Board. Shareholders have no liability for the company’s debts. The entity must have the Articles of Association and the appropriate trade licence. Details of the share capital must be recorded in the Commercial Register. The minimum registered share capital for a Joint-Stock Company is fairly high, at CZK2m (GBP 68,100 approx) though this increases to CZK20m if share capital is via the offer of shares to the public. In addition, a reserve fund must be established – a minimum of 20% of the first year’s net profit. For these reasons, a joint stock company may not be the most suitable corporate form for a small business.

Czech Republic Summary Guide Contents

Czech Republic Summary

Czech Republic Summary Chart

Czech Republic Residence

Taxation of Business People in Czech Republic

Living and Doing Business in Czech Republic

Business Forms in Czech Republic

Latest Comments

Expat Brit

Hi,

I am facing a dilemma and would like to invite any reader to advise me.

I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.

In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.

However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?

If anyone has pertinent advice on these points, I’d be grateful to hear them.

TJM @ Eindhoven, NL

T. Dog

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Jersey vs. Malta??

Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary

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Purchasing investment-link insurance for my staff

Would that count as income tax to my staff? And would that count as expense to my company?Michael

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Irish crisis - effects on small business?

Hi all,

Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.

Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...

Thanks,Kate

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Living in France contracting to Australian company

I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD.
Do I pay tax in France or Australia or both ?
Any help or guidance would be much appreciated.France move

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