DOING BUSINESS IN CZECH REPUBLIC IN 2023
Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Czech Republic. Our services include i) Czech Republic company registration ii) government license registration iii) corporate bank account opening in Slovenia and abroad iv) employee recruitment v) visa strategies and vi) office rental solutions in Prague and other Czech Republic cities.
| Compare different Czech Republic entities | Tax resident LLC | Joint Stock Company | Free zone LLC | Limited liability partnership | Branch office |
|---|---|---|---|---|---|
| Also known as | Společnost s učením omezeným | Akciová společnost | Společnost s ručením omezeným | Komanditní společnost | Odštěpný závod |
| Best use of company? | All products and services | To secure public funding | Manufacturing and export trading | Professional services | Specific projects |
| How soon can you invoice Clients/sign sales contracts? | 3 weeks | 5 weeks | 4 weeks | 4 weeks | 4 weeks |
| How soon can you hire staff? | 3 weeks | 5 weeks | 4 weeks | 4 weeks | 4 weeks |
| How soon can you sign a lease agreement? | 1 week | 1 week | 1 week | 1 week | 1 week |
| How long to supply corporate bank account numbers? | 6 weeks | 6 weeks | 6 weeks | 6 weeks | 6 weeks |
| How long to supply company registration/tax numbers? | 3 weeks | 5 weeks | 4 weeks | 4 weeks | 4 weeks |
| Corporate tax rate on annual net profits? | 19% | 19% | 19% | 19% | 19% |
| Limited liability entity? | Yes | Yes | Yes | Yes | No |
| Government grants available? | Yes | Yes | Yes | Yes | Yes |
| Government approval required for foreign owners? | No | No | No | No | No |
| Resident director/partner/manager/legal representative required? | No | No | No | No | Yes |
| Minimum paid up share capital? | € 1 | € 80,000 | € 1 | € 1 | None |
| Can bid for Government contracts? | Yes | Yes | Yes | Yes | Yes |
| Corporate bank account location? | CSOB | Citibank Europe | Deutsche Bank | HSBC | ING |
| Can secure trade finance? | Yes | Yes | Yes | Yes | Yes |
| VAT payable on sales to local customers? | 21% | 21% | 21% | 21% | 21% |
| Average total business set up engagement costs? | €10,660 | €14,410 | €11,060 | Request a proposal | €12,010 |
| Average total engagement period? | 2 months | 3 months | 3 months | 3 months | 3 months |
Czech Republic business setup summary
Press the link headings below to read detailed, relevant, up to date information.
Advantages and disadvantages
Advantages of Czech Republic company registration
- Czech Republic is a great place to register manufacturing businesses, because:
- Manufacturing companies with investments amounting to €1.8 million are eligible for a corporate tax holiday of up to 10 years;
- The country ranks 1st in several metrics including quality of infrastructure, quality of electricity supply, business sophistication and easy access to loans;
- Compared to other well-developed EU countries like Germany and France, Czech Republic offers benefits such as low labor costs;
- Capital investments enjoy significant Government investments and cash grants of up to 10% of the investment value;
- Czech Republic is an automotive paradise in Central Europe, with more than 30 vehicle brands with an annual output of €1.4 billion over the past 5 years;
- Manufacturing companies are also eligible for cash grants for training or retraining of employees up to the amount of 50% of the total training cost.
- Czech Republic businesses enjoy multiple investments incentives, such as:
- Government incentives like tax holidays, employment subsidies, real estate tax exemption and cheaper land purchase offers are available for companies undertaking labor and cash intensive projects in the country;
- Dividends and interest payments from Czech companies to EU companies are completely exempt from withholding taxation if the EU companies hold more than 10% stake in the Czech companies;
- Clients with investments in Czech regions with an unemployment rate above 14% for at least 1 year are eligible to apply for financial support;
- The country has over 104 municipal industrial zones targeting international investors with cost-efficient investment opportunities for eligible businesses;
- Czech Republic has signed tax treaties with over 70 countries including China, India, Singapore and the UK to reduce withholding taxes on payments abroad.
- Starting a business in Czech Republic is straightforward, because:
- An LLC (s.r.o) can be registered by only 1 director and 1 shareholder of any nationality;
- Clients can complete the incorporation process and corporate bank account opening without traveling to Czech Republic;
- There is no statutory minimum paid-up share capital required and consequently a company can be incorporated with a share capital of just €1;
- Czech Republic is in the top 15 countries in the World in terms of timelines of getting electricity, according to the World Bank.
- The economy of Czech Republic is highly competitive which makes it an attractive centre for business incorporation by overseas entrepreneurs:
- Czech Republic has been ranked 31st out of 137 countries in terms of its Global competitiveness by World Economic Forum;
- The economy has an efficient goods market, which means that the employers and workers interact in an efficient way and the employers tend to get the best-suited employees and the employees tend to get the best-suited jobs for themselves. Czech economy also has i) an effective anti-monopoly policy, ii) a competitive local economy along with iii) minimum barriers to trade and tariff. Therefore, making it an attractive destination for the investors;
- The country also has a sound and stable macroeconomic environment, strong institutional framework as well as world-class infrastructural facilities.
Disadvantages of Czech Republic company registration
- Value added tax (VAT) in Czech Republic is comparatively high at 21%;
- According to Education First, the fluency of the citizens in English in the Czech Republic is average, as per 2017;
- Government inefficiency and corruptions tends to remain one of the most problematic factors while doing business in the Czech Republic, according to WEF in 2017;
- Judicial processes in Czech Republic are very time-consuming. Clients involved in a commercial dispute should be prepared to be tied to the court for at least 2 years before a contract is enforced;
- A relatively high rate of capital gains taxes is levied at the rate of 19% from the sale of fixed and financial assets at the general corporate income tax;
- Clients engaged in building and construction would be facing at least 33 procedures taking an average of 120 days when dealing with construction permits.
- Czech Republic is a great place to register manufacturing businesses, because:
Best uses for a Czech Republic company
- The Czech Republic is an ideal location for establishing a regional automotive or manufacturing base in the heart of Europe;
- The country offers significant tax-incentives to qualified investors, while offering low operational costs in comparison to Western Europe economies.
