Register a Company in the Czech Republic

The Czech Republic is favoured by businessmen as a convenient jurisdiction for the registration of international companies. Czech law allows foreigners to conduct business activities under the same conditions and to the same extent as Czech entrepreneurs. Foreign citizens and corporations can become founders or co-founders of a company, or buy an existing Czech company.

Why do foreign entrepreneurs register their companies in the Czech Republic?

Of the myriads of business opportunities in the Czech Republic, Imperial & Legal’s lawyers highlight 5 key advantages.

1. Strategic location

   The Czech Republic is located in the heart of Europe and borders 4 countries: Germany, Austria, Slovakia and Poland. The country is fully integrated into the European Union and is a member of the European Economic Area. This gives Czech corporations free access to the vast markets of other European countries. The Czech economy is largely oriented towards exporting goods and services to Europe, making this jurisdiction an ideal location for companies looking to expand their presence on the continent.

2. Economic stability

   Another important advantage is the stable Czech economy, which is showing strong growth in the last years. The Czech Republic has created a favourable environment for long-term investment projects.

   The country is home to a diverse range of companies involved in a wide range of economic activities, from industrial manufacturing to high-tech and business services.

3. Transport infrastructure

   The Czech Republic has a modern and well-developed infrastructure, which includes motorways, railways and numerous international airports. A modern and safe transport system provides Czech entrepreneurs with smooth transport of goods and high mobility of employees.

4. Human resource capacity

   The ability to hire technically savvy professionals who speak two European languages is an important asset for any company. Czech professionals have excellent education and high professional qualifications, especially in areas such as engineering, industrial production and information technology. This intellectual capital contributes significantly to the competitiveness of companies operating domestically.

   At the same time, the level of labour costs in the Czech Republic is generally lower compared to Western European countries, which has a positive impact on the economic efficiency of local corporations.

5. State support for business

   The Czech government is constantly developing new ways to support entrepreneurs and attract foreign investment. Such measures include:

   • reduction of the corporate tax rate and other tax incentives;
   • state support for businesses engaged in research and development;
   • improvement and simplification of bureaucratic procedures.

   By supporting private companies in a variety of ways, the authorities of the Czech Republic increase the efficiency of doing business in the country.

What should an entrepreneur know before starting a company in the Czech Republic?

When starting a company in the Czech Republic, a businessman should first understand the specifics of certain processes in this country that inevitably accompany any commercial activity.

1. Interaction of state authorities with companies

   The Czech Republic has a state electronic document management system, Datová schránka, which consists of government servers, a secure mail programme and electronic mailboxes assigned to individual citizens, companies and government structures.

   This government portal allows the exchange of electronic letters and notifications, which are equated to regular paper documents under local law.

   On the one hand, it is very convenient. You will be able to promptly send letters and reports via the company’s Datová schránka account, which you receive automatically after official registration. You won’t need to make a separate electronic signature or otherwise verify your identity on separate government online portals.

   On the other hand, foreigners do not always realise how serious it is. However, an official letter sent to you via Datová schránka, such as a court notice, will automatically be considered read after 10 days (even if you never open it).

   Therefore, even if your Czech company does business exclusively abroad, you still need a savvy corporate secretary with knowledge of the Czech language to respond promptly to official emails.

2. Cautiousness of Czech banks

   As you know, the incorporation procedure in the Czech Republic was simplified as much as possible and enterprising foreigners were given the same opportunities as Czech businessmen.

   Unfortunately, the changes have not affected the work of Czech banking institutions, which are extremely cautious about co-operation with new companies of foreign origin, especially if the founders of these business structures do not reside permanently in one of the countries of the European Economic Area.

   Imperial & Legal’s staff will successfully solve both problems. We provide our clients with corporate secretarial services. We will help you open a corporate account in one of the Czech banks and advise you on how to interact with the managers of the financial institution in the first year of operation in order to avoid blocking the account.

3. Availability of information about the company

   The data of the owners of Czech corporations (individuals and companies) is entered in the Register of Beneficiaries, a public database freely available on the official website of the Czech government. Any person or organisation can find this information by entering the exact name or unique identification number of your company in the search box.

   In the same way, you can get data from your financial report to the Commercial Court, which are also posted in the public domain.

   Imperial & Legal advises entrepreneurs to take this European openness of commercial information in the Czech Republic as an inevitability. However, if for any reason you need to keep your personal data confidential, seek advice from our experts or consider registering a company in one of the classic offshore jurisdictions.

Types of Czech companies

Choosing the right form of legal entity in the Czech Republic depends on many factors, including the size and type of activity of the business, the number of founders, the financing strategy and the willingness of the owners to be liable. Each type of company has its own advantages and limitations, so it is important to carefully analyse all possible options and, if necessary, consult legal and accounting experts before making a final decision.

Imperial & Legal lawyers have prepared a brief overview of the 5 most popular legal forms for business registration in the Czech Republic.

Branch

In order for a company registered abroad to engage in regular business activities in the Czech Republic, it must register a branch or subsidiary in the Commercial Register.

A subsidiary is a separate legal entity and may be incorporated as a corporation or partnership.

From the point of view of Czech corporate law, a branch is not a legal entity and does not have its own legal capacity. In essence, it is a part of a foreign parent company, officially registered in the Czech Republic and carrying out the same commercial activities on its territory as the head office.

In case of bankruptcy of the Czech branch, the foreign parent company is liable for all its debts. The foreign company also appoints a director to its branch, whose powers are limited to the Czech branch only.

Limited Liability Company

The name of this type of company is usually labelled s.r.o. – an abbreviation of “Společnost s ručením omezeným”. What do you need to know about this commercial organisation?

• This is the most common legal form in the Czech Republic. Entrepreneurs choose limited liability companies for business registration, as there are minimal requirements for such corporate structures.
• S.r.o. – is a separate legal entity with separate legal capacity. Its authorised capital consists of contributions made by the founders.
• One founder is sufficient to register such a company. The owners of the s.r.o. are liable for its obligations only to the extent of the amount of their contribution to the founding capital.
• The amount of the authorised capital is not regulated and may be of any size. If the capital is divided into shares, the nominal value of the shares must be a multiple of CZK 1 and the shares must be registered.
• An entrepreneur usually makes a contribution to the founding capital of a company in cash. However, other options are also possible, such as the transfer of tangible assets or intellectual property owned by the businessman to the s.r.o.. Finally, the share in the company may be a financial obligation of the founder, in which case he will have to pay its creditors of the bankrupt company the amount of the unpaid contribution.
• In a limited liability company, the board of founders appoints a director. The position of director may be filled by the owner of the business, or by a hired manager.
• At the moment, there is no requirement in the Czech Republic to place a local resident in the place of one of the s.r.o. managers. Such a company may have foreign founders and directors.

Joint Stock Company

It is a more complex business structure to register and administer, allowing for additional investment in certain circumstances.

Joint-stock companies carry the indication to the legal form a.s. or Akciová společnost in their name. Here are some key features of Czech joint stock companies:

• In a.s., the share capital is divided into a certain number of shares with a set par value;
• There are 2 types of joint stock companies in the Czech Republic, depending on whether the corporation offers its shares on the stock market or issues only subscription shares assigned to certain shareholders;
• A closed joint-stock company in the Czech Republic must have an authorised capital of at least CZK 2 million (approx. EUR 80,000).;
• If it is a public company, its founding capital must have a nominal value of at least CZK 20 million (EUR 800,000);
• At least 30 per cent of the amount constituting the authorised capital a.s. entrepreneurs pay before an application for official registration is submitted;
• In the event of bankruptcy of a company, shareholders are liable for its debts only to the extent of the value of their shares;
• A.s. can be founded by a single person or company, including a foreign tax resident;
• A board of directors consisting of at least 2 directors is appointed to manage a joint stock company in the Czech Republic;
• Czech joint stock companies are obliged to hold a general meeting of shareholders once a year;
• The maintenance and administration of Czech a.s. is usually more expensive for businessmen compared to an ordinary limited liability company. This is why joint-stock companies are registered in the Czech Republic: when the business has a complex structure or when the project requires additional investments.

Full partnership

The Czech name for a general partnership is Veřejná obchodní společnost. The abbreviation v.o.s. is often used in the name to indicate the legal form.

A general partnership is a special type of trading company in the Czech Republic formed by two or more individuals or legal entities` conducting business activities under a common company name.

All partners in this case have equal rights and may represent the entire partnership in their own person. A Czech general partnership doesn’t need to have a founding capital. However, all partners are jointly and severally liable for the debts of such a company with all their assets.

Limited liability partnership

The Czech name for a limited liability partnership is Komanditní společnost. At the end of the name of such an organisation, the legal form is usually abbreviated as “k.s.”.

In contrast to a general partnership, a limited liability partnership distinguishes between 2 types of partners:

• General – engaged in the direct management of the company and liable for all its debts with all its tangible assets.
• Limited partners whose authority and liability for the firm’s debts is limited.

A k.s. registered in the Czech Republic must have an authorised capital, which consists of contributions from limited partners. In case of bankruptcy of the company, this type of founders can only lose their share in the authorised capital.

The partnership agreement determines the decision-making procedure as well as the distribution of profits and responsibilities between the participants.

What taxes do Czech companies pay?

Income tax

21% is the Czech corporate income tax rate in force in the Czech Republic. The rate applies to all income of resident companies (including foreign income) and to Czech income of foreign companies and branches.

The Czech Republic has reduced corporate tax rates:

Corporate tax rate	Profit
15%	Dividends of Czech resident companies received from non-resident organisations abroad
5%	Returns of some Czech investment funds.
0%	Income of Czech pension funds

Also, in some cases, the Czech Republic may charge corporate tax at higher rates.

VAT

21% is the current value added tax rate in the Czech Republic.

12% VAT applies to sales of food (except for most beverages), drinking water, part of construction work (if social housing is being built), hotel services, tickets for cultural and sporting events, and catering services.

Value Added Tax is not charged in the Czech Republic on export transactions, on the sale of printed materials and electronic copies of books, also on the rental of housing, financial and insurance services, as well as in such socially important areas as education and health care.

If you would like to find out more about what other tax obligations a business organisation registered in the Czech Republic has, please contact our staff for advice. Imperial & Legal’s specialists can also help you to register for VAT and optimise the fiscal burden on your business.

How to open a company in the Czech Republic

Over the years, the process of incorporating a business in the Czech Republic has become much simpler and no longer takes an entrepreneur several weeks. However, if you are not an expert in local corporate law and are not fluent in the Czech language, it is better to delegate company registration in the Czech Republic to professionals.

Let’s look at how the process of company registration in the Czech Republic is organised together with Imperial & Legal specialists on the example of opening a limited liability company.

1. Preparing for registration

   This is the most time-consuming phase, during which several important tasks will have to be completed at once. Firstly, our specialists:

   • will check and approve a suitable name for your company;
   • agree with all interested parties on the structure of the future corporation: legal address, scope of economic activity, number of founders, amount of authorised capital, number and par value of shares (if applicable), distribution of company shares among the founders, decision-making procedure in the company.

   The scope of your company’s activities may be free or conditional. However, in any case, if you will be operating in the Czech Republic, you will need to obtain a commercial licence.

   A registered office is a virtual or real address in the Czech Republic where your company will be registered. If you plan to sell anything in this country and make payments through a Czech bank, your company will most likely need to rent an office and employ staff. Imperial & Legal provides a Czech address for the incorporation of international companies and finds the best office space for rent for businesses planning to operate in the Czech Republic.

   It will then be necessary to appoint a director of the company. Fortunately, the Czechs have stopped requiring that at least one director in an s.r.o. be a local resident. As a rule, directors are approved at a meeting of the founders before the articles of association are signed.

   In the final part of the preparation, when all issues and parameters have been agreed, Imperial & Legal lawyers will draw up the memorandum of association and articles of association and organise a meeting with a Czech notary.

2. Signing of constituent documents with a notary

   The founders or their representatives acting on the basis of a power of attorney must sign the articles of association and memorandum of association of their company in the presence of a Czech notary.

   The notary, in turn, verifies, certifies and registers the company’s statutory documents, records the name of the company and information about the owners and directors.

3. Official registration

   The final step is to pay the registration fee and submit the application for registration together with all related documents to the Commercial Court. You can also upload documents, submit the application and pay the fees on the state online portal. This part of the work is usually also carried out by our employees.

   The assistance of professional corporate lawyers will help avoid mistakes. Czech officials should take no more than 5 working days to review the documents and register the company. The corresponding entry will appear in the official Commercial Register. Your company will be assigned a unique number and provided with an account in the “datove skranke”, where official e-mails will be sent.

   Imperial & Legal usually continues to co-operate with entrepreneurs even after company registration in the Czech Republic. Our specialists will be happy to help register with the Czech tax authorities, obtain commercial licences, prepare annual accounts or obtain visas for transferring employees to the Czech Republic.

FAQs about on company registration in the Czech Republic

What are the differences between a representative office, a branch and a subsidiary in the Czech Republic?

A foreign company may not sell anything in the Czech Republic, but only explore a new market for itself or demonstrate its products and services to potential customers. In this case, a representative office of the foreign company is registered in the Commercial Register.

If a foreign company is interested in sales, but foreign businessmen still want to operate on the Czech market according to the standards accepted in their home country and through a fully controlled structure, a branch office is registered.

Neither a representative office nor a branch office are considered independent legal entities in the Czech Republic. Rather, they are Czech subdivisions of a foreign company, which is liable for all their debts and obligations. Directors of representative offices and branches are appointed by the parent company.

A subsidiary, unlike a representative office and a branch, is a legal entity separate from the parent company and has its own legal capacity. One of the previously discussed corporate forms is used for its registration in the Czech Republic.

The liability of a foreign company for the debts of its subsidiary is usually limited to its share in the share capital. The management of the Czech subsidiary has greater autonomy, but cannot make decisions in the parent company abroad.

Do Czech partnerships pay corporate tax?

Czech partnerships are separate legal entities under corporate law. Nevertheless, the income of general partnerships in the Czech Republic is not subject to corporate tax. Tax liabilities arise for v.o.s. partners after they receive their dividends.

Czech limited liability partnerships are subject to a more complex taxation principle. As you know, all partners there are divided into general partners and limited partners. The part of the organisation’s profit that is paid as dividends to the general partner is not taxable at the corporate level. Accordingly, the part of the k.s.’s profits that will be distributed to the limited partners is subject to corporate tax.

In which cases is a Czech company's income taxed at a rate higher than the standard rate?

As the Czech Republic is a member of the European Union, it aligns its fiscal policy with resolutions from Brussels. One such EU resolution regulates higher tax rates for large multinational corporations whose total profits (from sources in different jurisdictions) exceed €750 million in 2 out of the last 4 reporting periods and whose effective income tax rate (based on tax payments relative to net profits in all countries of economic presence) does not reach 15%.

The higher rate, also called the “excess profit tax”, is used in the Czech Republic when calculating corporate income tax on the income of banking institutions and companies in the energy sector.

The calculation methodology for the 2024/2025 tax period is as follows:

1. The tax base for corporate tax at the standard rate of 21% is taken as the average of the annual profits derived from the reported profits of the bank or energy corporation in the tax periods covering 2018-2021 multiplied by 1.2 (+20%);
2. The part of the Czech corporation’s declared income in the current period that exceeds the calculated value is declared as “excess profit”. An additional tax of 60% is imposed on this amount. Thus, the excess profit is subject to 81% corporate tax.

How does a free licence of a Czech company differ from a conditional licence?

As you know, by means of licensing, the Czech government regulates commercial activities carried out in the country.

Free operation does not imply that the entrepreneur must have any specific professional skills. In fact, a company informs the Czech Commercial Court that it is going to operate freely and in a matter of days receives a free commercial licence.

A conditional licence is issued for a business that is closely monitored by the state and requires the performer to be educated and professional. For example, if the life and health of Czech citizens depend on your activities, you need to obtain a conditional licence, which takes several weeks to obtain.

Specialists of our company often help their clients to prepare all necessary documents for registration of a commercial licence for the specified activity.