Registration of a sole proprietorship in the Czech Republic

Live and work in the Czech Republic! It is not too complicated if you know the rights.
One of the types of business is a sole proprietorship. What benefits lay in setting up an individual en-terprise? Which rights a sole proprietorship license provides to a foreigner?

What you should know about an SP in the Czech Republic:

Registration of a sole proprietorship in the Czech Republic

  • having the license a physical person can independently hold a business on the territory of the coun-try;
  • individual enterprise registration in the Czech Republic costs much lower than a company registra-tion;
  • closing a sole proprietorship is much more cost-effective and easier process than a company liquida-tion;
  • the value added tax is 15% compared to companies (19%);
  • an individual entrepreneur can get the license for 80 free types of activity that do not require special education or experience;
  • a sole proprietor has the same rights in doing business as a legal person;
  • a foreign sole trader registered in the Republic has a right to get the permanent residence permit here.

Our visa specialists will help you to choose the proper way of doing business in the Czech Republic depending on the taxes optimization and your legal status. Basically, almost the whole social system in the country is based on the taxes charged from sole proprietors, which is a loud proof of the level of individual enterprises development in the Czech Republic.

Here is the list of several basic advantages of being an individual entrepreneur:

  • the authorized capital is not required to open a sole proprietor license;
  • opening and closure of the sole proprietorship license is fast and easy;
  • possibility not only to work independently, but to hire employees as a company does;
  • property involved in a business development is not charged;
  • simplified order of business development (there is no need in meetings and creating protocols that are required when having a company);
  • a possibility of permanent expanding the quantity of licenses that allows performing new types of activity;
  • a possibility for a foreign proprietor to get the 2-year residence permit with the right to replace it with the permanent residence permit (gaining the status of the permanent resident of European Union).

Here are disadvantages of having sole proprietor license in the Republic:

  • an individual entrepreneur in the Czech Republic gives a warranty for all possible mistakes in busi-ness in the amount of his/her own property;
  • getting a permanent residence permit in the Czech Republic can be harder for a sole proprietor;
  • a foreign sole proprietor does not have a right to submit money to the Medical fund of the Czech Republic which makes him/her to use commercial, but not state (public) insurance.

To sum up, a sole proprietorship in the Czech Republic will suffice for those foreigners who are in-tended to do business independently without involving employees. The process of setting up, perform-ing or liquidation of such a business is extremely simple, tax accounting is also simplified and the kind of the proprietorship itself does not imply a lot of bureaucratic obligations, which reduce financial and temporary expenses.

We also suggest that students consider getting residence permit in the Czech Republic on the basis of a sole proprietor license. The reason is that a foreigner who resides in the Czech Republic on the basis of a student visa has a right to get the permanent residence permit only after 10 years of living in the Czech Republic compared to all the rest foreigners (they can get it after 5 years). However, the re-placement of a visa type to a sole proprietor one in a timely manner will help them to speed up the process of becoming a legal permanent resident of the Czech Republic and the European Union.

Sole proprietors in the Czech Republic including foreigners, have a right to pay monthly percents to the pension funds, which guarantees them obtaining pension grant afterwards.

Our specialists will answer all questions that occur.
Are you an individual entrepreneur in the Czech Republic? It is easy to do business with DoMyTax. Order the registration of a sole proprietorship in Prague on our website or via the phone +420 234 261 969.