Setting up a business in the Czech Republic
Do you want to lead a business in Europe, attract foreign investments and perform on the international entrepreneurial ring? Then you should consider a country in the very center of the European continent – the Czech Republic.
This country has 10 millions of population and takes the first places in the ratings of safe living, low prices, business convenience and profitable geographic location.
Why the Czech Republic is perfect for business:
- due to the fact that the Czech Republic is a member of the European Union, a local company is considered to be a European one with all the rights and access to the whole European market;
- the Czech Republic has never been in the “black” lists;
- the Czech banks have never been included in the “black” lists;
- the country is a member of the European Union and the Schengen Agreement which means that citizens are allowed to have the European health insurance and travel freely around the European territory;
- the Czech State provides each account with insurance in local banks;
- the Czech banks offer low prices for international transactions;
- foreign entrepreneurs are eligible to apply for 2-year Schengen visa with all the rights a European resident has and with the possibility to replace this visa with the permanent residence permit;
- relatives of a foreign founder of a Czech company are allowed to move to the Re-public on the basis of family reunion. Friends of a founder can, for instance, move on the basis of employment in the founder’s company;
- a foreigner holder of the Czech temporary residence permit obtains almost all the rights a Czech citizen has (except the military right, the right to vote and to be vot-ed for);
- it is possible to get free education for a whole family in Czech (some of specialties are also free in English and German) on each level – from a school to a doctorate degree in a university;
- there is a very low level of corruption;
- the Czech economy is one of the most rapidly developing ones in the EU (the de-velopment speed takes the third place after Slovenia and Ireland);
- the country has steady-state economy;
- there is a high concentration of affiliates of foreign companies;
- in 2016 the Czech Republic took the ninth place in the rating of countries with the lowest living prices;
- the Czech Republic is not an offshore, still it offers convenient conditions of doing business. A lot of entrepreneurs start avoiding offshore companies because of the amount of undesirable attention and choose the Czech Republic instead;
- a Czech company is eligible to open accounts in European banks.
Registration or purchase of an LLC in the Czech Republic
A foreigner can register brand new company in the country (an LLC) and to become its founder with the purpose of doing business in the Republic. It is also possible to purchase a firm that already exists and was set up by the previous owner (or a group of owners). Existent companies in the Czech Republic are sold with clear history, re-registration takes a few days. A new LLC in the country also can be registered within a week.
Prices and the details of the service on the registration of a sole proprietorship or an LLC can be found here.
Peculiarities of Czech business:
- many types of activities do not require having a license (80 free licenses) both for companies and for individual entrepreneurs;
- a license on special types of business can be obtained within 2 months period on the basis of the education or a long term work experience;
- according to the law, an authorized capital of a Czech company can be equal one koruna (however, it is not recommended that foreign founders register this sum as an authorized capital due to potential distrust of business partners and clients to such a company. We suggest submitting the sum in the amount of 200 000 korunas – this capital must be presented on a company account during the registration.)
- Czech companies and sole proprietors are entitled to hire employees;
- Performing business activity a company develops a brand that can be sold (suc-cessful companies are expensive). An individual entrepreneurship has no name and it is not possible to sell one;
- liquidation of a company in the Czech Republic is very complicated from the bu-reaucratic point of view and costly process, that’s why founders prefer to resell companies. Closing of a sole proprietorship is quite an easy procedure.
There are cases when a foreigner should consider an individual entrepreneurship in-stead of setting up a company. Usually, this scheme works for foreign students or people who would like to work independently.
Students are eligible to apply for the permanent residence permit in the Czech Repub-lic only having lived in the country for 10 years (the rest of foreigners can apply after 5 years of living in the Republic). Therefore registering a sole proprietorship and get-ting the business visa on the basis of it, can be convenient and guaranteed way to speed up the process.
A sole proprietorship in the Czech Republic has the following peculiarities:
- a sole proprietorship can be registered faster than a company;
- liquidation of an SP is much easier compared to a company;
- a foreign sole proprietor in the Czech Republic has no right on having state medical insurance, decree grant and financial covering of long term diseases, however has a right to get the pension;
- accounting is much simpler than in a company;
- value added tax for a proprietor is less than for a company (15% with 19%);
- purchase of stuff for sole proprietorship activity is not charged (it can be an auto, a computer, a mobile phone and so on.);
- a Czech company can purchase property and the license of a sole proprietor does not allow this (an entrepreneur can surely make this purchase as a physical per-son).
Prices and the details of the service on registration of an SP or an LLC can be found here.
To get the explicit information regarding the difference between setting up a firm and registering an individual entrepreneurship in the Czech Republic you are welcome to contact us. Feel free to order one of these services from us.
DoMyTax company provides the possibility to do business in the Czech Republic un-der a Czech lawyer’s supervision.