Czech Republic
SETTING UP IN BUSINESS
Introduction
Entrepreneurial even during the Communist era, Czechs have seized every opportunity to demonstrate their free-market credentials since joining the EU in 2004. Today the Czech Republic offers a stable and welcoming home to foreign investors. But to make the most of the opportunities here, you need local knowledge.
What are the main types of company in the Czech Republic?
There are four main kinds of business entity for foreign investors and they are as follows:
- limited liability company (SRO)
- joint stock company partnership (AS)
- partnership
- branch office
What are the main features of a limited liability (SRO) company?
- total share capital to be at least CZK 200,000 (€7,000), at least 50% paid up
- each shareholder to contribute minimum of CZK 20,000 (€700)
- an individual may be sole shareholder in no more than three SROs
- a reserve fund from profits to be built up to 10% of registered capital
What are the accounting/audit requirements for a limited liability (SRO) company?
A statutory audit is mandatory if at least two of the following criteria are met:
- balance sheet exceeds CZK 40 million (€1.4 million)
- net turnover exceeds CZK 80 million (€2.8 million)
- number of employees exceeds 50
What are the main features of an (AS) joint stock company?
- minimum share capital CZK 2 million (€70,000)
- if via a public offering, minimum share capital CZK 20 million (€700,000)
- 30% of share capital to be paid up
- two-tier system comprising management and supervisory boards
- reserve fund from profits to be built up to 20% of registered capital
What are the accounting/audit requirements for an (AS) joint stock company?
A statutory audit is mandatory if at least one of the following criteria is met:
- balance sheet exceeds CZK 40 million (€1.4 million)
- net turnover exceeds CZK 80 million (€2.8 million)
- number of employees exceeds 50
What are the main forms of partnership in the Czech Republic?
There are two main kinds of partnership under Czech corporate law:
- general partnership (all partners have equal and unlimited liability)
- limited partnership (at least one partner has limited liability)
What are the main features of a branch office?
- branches are not separate legal entities, but part of a foreign parent
- branch manager may be Czech or foreign national
- branch requires trade license before it can be registered
- accounting records to be prepared in Czech language
How easy is it to recruit staff in the Czech Republic?
The unemployment rate in the Czech Republic is much lower than in neighboring Poland and Slovakia. Nonetheless it remains a pressing issue and if you are seeking to hire Czech staff, you should have no trouble finding well-educated and motivated applicants. Labor laws are complex, however. For advice on the best way forward, contact one of our recruitment specialists in Prague.
What is the regulatory environment like?
The Czech Republic has made strong progress in its efforts to liberalize the business environment. 85% of the economy is now in private hands, corporate tax was cut from 26% to 24% in 2006, and foreign investment, reflecting this trend, has soared. But there’s still plenty of red tape around, which is why it is essential to secure expert advice on legal and accounting issues.
Are there financial incentives available?
Czech authorities offer a wide range of financial incentives for foreign investors:
- new manufacturing investment: ten years’ full relief of corporate tax
- technology and business investment: the state pays up to 50% of costs
- substantial job-creation and training grants
And what about banking facilities?
Foreign investors are well served by an array of international and local banks now operating in the Czech Republic. It is worth noting, however, that setting up a corporate bank account can be a complex procedure. Make it simple – talk to us and we’ll arrange everything.
