The Czech Republic is on the rise as a European Powerhouse.
The appeal of the Czech Republic as the home of your new business is obvious to many. Located in the centre of Europe, the Czech Republic enjoys a rock-solid economy, stable infrastructure, and a brimming talent pool from which businesses can hire.
The European country is also appealing from a financial perspective, with a relatively low average monthly salary for Czech employees, minimal living expenses, and a low 19% business tax rate.
Now, the Czech government is also offering significant tax breaks for companies who will bolster strategic services outside of the country’s urban centre in Prague.
What types of Czech business structures are there?
There are a variety of legal entities that may be formed in the Czech Republic.
Any of the previously listed business forms can be a joint venture, in which there are two partners, one of whom is typically a Czech resident.
The Czech Republic’s most common business type: SROs.
SRO’s are the most common company type established in the Czech Republic. Like in many countries, partners in an SRO are liable for the company’s obligations only up to the capital they originally contributed to the company. In the Czech Republic, SROs are required to start with a minimum registered capital of CZK 200000.
Starting business in the Czech Republic for foreigners outside the EU
If you are foreigner from outside the EU, a realistic opportunity for registration as a self-employed person is to come to the Czech Republic for another purpose (studies, work …). You could than begin your business directly the Czech Republic, and if necessary, you could change the purpose of your long-term residence permission for business purpose.
For establishing an LLC, you could come to the Czech Republic on a short-term visa (tourism). When a foreigner outside the EU is a member of a Czech legal entity, he/she may apply for short-term Schengen visas for business trips and participation on the running of the company. Companion of an LLC may also apply for a long-term visa for business purposes in the Czech Republic, but he/she has yet to consider some interest of the authorities about the business plan and the functioning of the company.
Registering self-employment for foreigners
Because being self-employed is a business of a natural person, the Trade Office requires by registration to prove your stay permission in the Czech Republic. You also need an extract from the penalty register from the country of origin (often could be ordered at your embassy).
The Trade Office allows self-employment for foreigners with the long-term residence only for the duration time of their residence permit. This means that the foreigner must prolong the self-employed status each year after the receipt of a new visa.
The Trade Office also requires to register the place of business. It can be a place of residence of the foreigner in the Czech Republic, but the property owners must give their consent with their authenticated signature. You can also rent a virtual office by a specialized company.
A foreigner with permanent residence in the Czech Republic has the same conditions as a Czech citizen. He/she doesn’t have to provide the extract from the penalty register. He/she could register the place of business at the address of the permanent residence without any proof from the property owner.
The 10 steps for setting up your Czech SRO
Registration will require the following documents:
What taxes will I need to pay on my Czech business?
If you establish a business in the Czech Republic, you can expect to pay two or three kinds of taxes:
3. Road Tax – Applicable only if you plan to use a motor vehicle in your business. Road tax rates are variable, but fall between CZK 1000-5000 annually.