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Company Registration in the Czech Republic

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Welcome to this comprehensive article where we explore one of the most popular tourist destinations in Europe – the Czech Republic – as a platform for developing your business.

Steps from Idea to Certificate

Let’s explore this exciting process together, from the moment an idea emerges to the official start of your company:

    1. When choosing a company name, the best strategy is to avoid generic terms to stand out among competitors.
    2. Now, you need to determine which type of company best aligns with your goals and business plan. (We will delve into possible options in the next section.)
    3. Prepare the founding documents, confirming your serious intent to establish your business.

Note: Steps 2-3 are the best time to seek consultation from the company Finexmo to save time and money.

    1. Create a “guidebook” for your project: the Articles of Association. Here, you outline your goals, governing bodies, and other key aspects.
    2. Share capital: Ensure you are ready to contribute the share capital according to the requirements of the chosen company type.
    3. Decide how you will manage the business. There are several options: you can choose management through shareholder meetings or appoint a manager.
    4. The documents need to be shown to a notary to ensure that everything is in order and complies with the laws.

After that, things speed up:

  1. Submit the registration application.
  2. Pay the state fee.
  3. Finally, receive the coveted certificate of registration.

You will be surprised at how quickly you can obtain a trade license by seeking out experts in the field.

Open company in Czech Republic. Choose Your Business Type

There are six main types of companies in the Czech Republic that are regulated by the Commercial Code:

  • Limited liability company (s.r.o.)
  • Limited partnership (k.s.)
  • General partnership (v.o.s.)
  • Joint-stock company (a.s.)
  • Cooperative (družstvo)
  • Branch office

Our clients most often prefer two of them. Here we explain why they make this choice.

Advantages of Limited Liability Company (s.r.o.)

    • Minimal registered capital

You can establish a company for as little as 1 Czech crown, which is very convenient if you don’t have significant funds at the start.

    • Limited liability

Your personal property is not at risk if your business doesn’t go as planned. You are only liable up to the extent of your investment in the company.

    • Simplified management

You can be the sole founder and executive director of your company, making decisions independently. You can also appoint others to positions within your company if you want to delegate some responsibilities.

    • Low tax

You pay a 19% tax on profits from your business, lower than other company types. You can also utilize various tax benefits and deductions to reduce your tax base.

Advantages and Disadvantages of Joint-Stock Company (a.s.)

Advantages:

    • Prestige

You can create an image of a reliable and respected company that attracts investors, partners, and clients.

    • Stock sales

You can go public and sell your shares to the public if you want to expand your capital.

    • Security of personal property

If the project is unprofitable, you risk only the nominal value of your shares.

Disadvantages:

    • High registered capital

You must have a minimum of 2 million Czech crowns to establish an a.s., which can be problematic if you lack sufficient funds at the start. If you want to create a public a.s., you need a minimum of 20 million Czech crowns.

    • Complex management

You must have two management bodies: a board of directors and a supervisory board. You must also hold regular shareholder meetings and comply with various legislative requirements for reporting and control.

    • High tax

It is a 19% tax on profits from your business plus a 15% dividend tax paid to shareholders. This is higher than other types of companies.

Buy or Register company in Czech Republic?

Purchasing an existing company in the Czech Republic is another way to start your activity in this country without going through the entire company registration process from scratch. This can be convenient and economical. Specialists at Finexmo can present valuable company options tailored to your needs. We ensure that the enterprise is clean and free of hidden issues or risks. Contact us to learn all the details, including the cost of our services, which include:

  • changing the Articles of Association,
  • document translation,
  • taxpayer registration, and more.

Czech Republic: A Great Place for Business Development

  • The country boasts one of the most developed and competitive economies in Europe.
  • It has a high percentage of university graduates, especially in fields like science, technology, engineering, and mathematics. You won’t have trouble finding qualified personnel.
  • Importantly, the Czech Republic offers some of the lowest business costs in Europe due to:
    • low inflation rates,
    • low corporate income tax (19%),
    • low minimum wage (629 euros per month as of 2023),
    • low prices for renting or buying office space, equipment, and materials.

What Could Be Particularly Promising?

  • IT and high technology.
  • Production of various goods, especially in areas like engineering, electronics, automotive, and chemical industries.
  • Tourism-related businesses such as hotels, restaurants, agencies, tours, etc.

Finexmo’s legal consultants and lawyers know all the nuances of registering or purchasing a business in the Czech Republic and can save you time and effort. The key is to have a clear business plan and strategy; the rest can be worked out with the experts.

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