Business entities in Czech Republic in 2024

There are several types of business entities available in Czech Republic, the most commonly used being the limited liability company. Our Firm will be pleased to advise our Clients to determine such entity type is optimal for their business goals, or if another one would be a better fit to the nature of their business. See the page below for further information the main types of business vehicles available for registration in Czech Republic and their business setup requirements.

• Doing business in Czech Republic with a local entity

  The Czech Republic Limited Liability Company (společnost s ručením omezeným or SRO)

  • A limited liability company in the Czech Republic can be registered by a single owner with a minimum capital requirement set at €1 (CZK1). Only one director can be appointed, who can be both an individual or a corporate, with no residency requirement. The amount of capital set must be paid up within five years after company registration;
  • Limited liability companies in the Czech Republic are required to file financial statements with the tax authority every year, but an external audit is required only if the business meets at least two of the following three criteria: i) balance sheet amount above €1.5 million ii) annual turnover over €3 million and iii) over 50 employees;
  • Best uses for a limited liability company: the limited liability company is the most commonly legal vehicle used by foreigners in order to start a business in Czech Republic. It is an adequate vehicle for both trading and manufacturing activities.

  The Czech Republic Joint Stock Company (akciová společnost or AS)

  • Czech joint stock companies registration requirements are similar to those of the limited liability company, except that the entity requires i) an higher amount of issued capital of €75,000, payable within five years after company setup and ii) a supervisory board including at least three members, who cannot be also directors of the company;
  • JSCs are also subject to stricter audit requirements, as they are only exempt if they meet the three following criteria: i) balance sheet amount above €1.5 million ii) annual turnover over €3 million and iii) over 50 employees;
  • Best uses for a joint stock company: thanks to stricter regulations over management, the joint stock company is a good business vehicle for shareholders willing to register a new business but not be involved in its day to day management. It is also the right entity for those of our Clients who are looking to raise capital or list on the local stock exchange (PSE).

  The Czech Republic free zone company

  • Foreigners forming a company in Czech Republic can decide to register the entity in one of the country’s special industrial zones (click hyperlink for a map). Requirements for the same include: i) a minimum investment of €2 million (€4 million in some of the SIZs) and ii) at least 20 jobs creations. Under the “Technology Centres” Program, innovative businesses benefit from a lower minimum investment of €1 million;
  • Benefits include: i) up to ten years of corporate income tax exemption ii) a cash grant of up to 7,500 per job created and iii) property tax exemption during up to five years. See this page for further details on benefits available;
  • Best uses for a free zone company: registering a company in an industrial zone is the optimal way to start a manufacturing or R&D business. See also this page for alternative low cost manufacturing locations in Eastern Europe.

• Doing business in Czech Republic with a foreign entity

  The Czech Republic branch office

  • In accordance with the local laws, foreign companies can open branch office entities in Czech to do business. Because branches are not considered as separate legal entities, their parent company will be subject to unlimited liability for losses incurred by the branch;
  • Best uses for a branch office: registering a branch instead of a separate subsidiary enables our Client to minimize accounting and bookkeeping obligations, as the accounts of the head office and the branch will be the same.

  The Czech representative office

  • Important note: Czech Republic does not differentiate representative offices from branch offices. Consequently, the former are subject to the same tax filing obligations, although they are not subject to taxation provided they can demonstrate no revenue generating activity is conducted;
  • Best uses for a representative office: A representative office can be used when our Client is seeking to venture in the Czech Republic markets.

• Table of comparison between Czech Republic entities

  Operations and logistics	LLC	JSC	Free zone company	Branch	RO
  Also known as?	SRO	AS	SIZ company	Branch	RO
  Doing business in Czech Republic permitted?	Yes	Yes	Yes	Yes	No
  Allowed to sign contracts with local Clients?	Yes	Yes	Yes	Yes	No
  Allowed to invoice local Clients?	Yes	Yes	Yes	Yes	No
  Can register the company with a virtual office solution?	Yes	Yes	Yes	Yes	Yes
  Allowed to import raw materials?	Yes	Yes	Yes	Yes	No
  Allowed to export goods?	Yes	Yes	Yes	Yes	No
  Accounting and tax
  Standard Czech corporate tax?	19%	19%	0%	19%	Cannot trade
  Corporate bank account?	Commerzbank	CNB	Unicredit	Commerzbank	CNB
  Statutory audit always required?	No	No	No	No	No
  Annual tax return to be submitted?	Yes	Yes	Yes	Yes	Yes
  Access to DTAAs?	Yes	Yes	Yes	Yes	No
  Company law
  Issued share capital required?	€1	€75,000	€1 million	None	None
  Resident director/manager required?	No	No	No	Yes	Yes
  Czech Republic shareholder /partner required?	No	No	No	No	No
  Minimum number of directors/managers?	1	1	1	1	1
  Minimum number of shareholders/partners?	1	1	1	Parent entity	Parent entity
  Individual shareholders/partners allowed?	Yes	Yes	Yes	No	No
  Corporate shareholders/partners allowed?	Yes	Yes	Yes	Parent entity	Parent entity
  Public register of shareholders and directors?	Yes	Yes	Yes	Yes	Yes
  Immigration
  Can the entity hire expatriate staff in Bulgaria?	Yes	Yes	Yes	Yes	Yes
  How long to get work permit approved	3 months	3 months	3 months	3 months	3 months
  Fees
  Estimate of engagement costs	€10,660	€14,410	€11,060	€12,010	€12,310
  Draft invoice	View invoice PDF	View invoice PDF	View invoice PDF	View invoice PDF	View invoice PDF