HOWTO: Register as a Sole Trader (Živno) in the Czech Republic
If you plan to do business or to get a residence permit in the Czech Republic then we have some information that will illuminate a lot of bureaucratic issues. As the EU is known for its pedantry when it comes to documents, we are ready to solve all the problems for our client; which means that you are in safe hands of professionals!
The most popular way of business immigration into the Czech Republic is setting up a legal person or a company with limited liability (CLL) there. More details are here. There also is another way – to register a sole proprietorship. This option is convenient for a person immigrating alone.
Different ways of setting up a business are used for different purposes, each has its pros and cons and the choice is up to you. We are here to discuss the issue.
Advantages of being a sole trader in the Czech Republic:
– fast setting up or liquidation a business along with an opportunity to suspend a license for any period of time;
– while registering a proprietorship you are eligible to apply for a business visa with an opportunity to extend it up to 2 years. Having been registered as a sole trader for 5 years you can apply for settlement;
– accounting system, tax reporting as well as many other stages of business have been simplified;
– an opportunity to work without having a work permit in the Czech Republic;
– it takes only a few days to add a new type of activity;
– no extra taxes on a withdrawal of funds.
Disadvantages of being a sole trader in the Czech Republic:
– a sole trader is a financially liable person and the amount of the liability is his property used for business needs;
– there is an obligatory monthly fee for Social Insurance that must be paid since the first day of registration even in case a proprietor hasn’t received any financial income yet. Minimal payment charged in 2016 was 1972 korunas (The Medical Insurance fee is obligatory);
– to register as a sole trader you must posess a business visa even if you don’t plan to stay in the country;
– the period from the moment of registration a sole tradership to the moment of arriving to the Czech Republic with visa shouldn’t be longer than 6 months, otherwise the sole tradership will be liquidated;
– the registration process is divided into two steps: before arriving to the country there is an “advance registration” and you should “activate the registration as a sole trader” having arrived to the Czech Republic.
Taxes a sole trader must pay are Social Insurance Tax (is charged monthly and depends on the amount of profit) and Income Tax (is charged once a year in amount of 15% after filling the annual declaration).
A sole trader’s financial income will not be charged a fee for Medical Insurance until the permanent residence permit is received. But because it’s obligatory in the country to be medically insured, a sole trader must set a contract with Health Insurance Company as any natural person does.
A sole trader must provide the annual tax declaration for the previous year to the Tax Administration until 31th of March and the annual report on Social Insurance managing until 30th of April.
Steps you should follow to set up a sole proprietorship:
- To choose a type of activity.
There are three kinds of licenses in the Czech Republic:
– professional (requires diploma or any proof of qualification);
– concession (is issued on the basis of special permit from the Ministry).
Most of our clients have received the first kind to start a business in the Czech Republic. Free licenses cover 80 types of activities that do not require any proof of qualification. In the list there are for instance wholesale and retail trade, hotel services, hosting, IT consulting, translation and teaching at language courses, estate agent services etc.
- To collect documents for applying to the Agency of Proprietor Activity:
– a certificate of no criminal records in the Czech language notarized by the court translator;
– an agreement with property owner on granting you the legal address + extract from the Real Estate Register;
– current visa or biometric card;
- To be registered at the Agency of Proprietor Activity:
– you bring the set of documents mentioned above to any agency of proprietor activity;
– an agent takes copies and fills the electronic form from your words;
– you pay 1000 korunas in the bank-office.
- To get the certificate of registering a sole proprietorship:
Within a week after registration at the Agency you’ll receive the certificate with your register number on it. Your certificate’s validity expires simultaneously with your visa. If the certificate is about to become invalid and the decision about visa extension still isn’t made then it’s obligatory to apply for the Agency of Proprietor Activity where the expiration date of your certificate will be postponed. Unless you do it the certificate will be cancelled when its validity is over.
- To register at the Tax Administration:
During 30 days after having received the certificate you must register as a sole trader (OSVČ) with the Tax Administration at the place of residence or at your legal address. You should fill in a form and then submit it to a registration office. If you have a bank account set for the entrepreneurial activity you should mention it in the form and attach a copy of the bank agreement on opening this account.
Within a month you will be issued a report with Individual Taxpayer Identification Number (ITIN).
- To register at the Social Security Administration:
During 8 days after receiving the certificate you are oblige to register in the Social Security Administration. The procedure consists of filling in a form and submitting it into a registration office. Having been registered you will get a mail with personal register number and the constant symbol that you must provide when making monthly payments.
- To register with Health Insurance Company (only for permanent residents):
In the course of 8 days after the certificate is received it’s obligatory to register at any public Health Insurance Company.
It was the final stage of the registration a sole proprietorship in the Czech Republic!
In case you do not have a permanent residence permit, do not hesitate to contact us. We will consult you for free. Please press the skype symbol on our webpage to get fast and easy communication.
Feel the Union!
Any sole trader will enjoy the concept of common Europe in the case of own business. Setting up a business in the Czech Republic gives access to the whole European Union market that means unimpeded business activity on the territory of the EU and the Schengen Area, access to any partnership contracts and necessary materials, reliable protection of the European Legislation and so on. By choosing the small country with the population of 10 million you in fact get one of the largest world markets populated by 500 millions of people. The only limitation is the size of your professional ambitions.
We will do our best to make your visit to the Czech Republic as comfortable as possible.
You will be assisted on every stage of doing business and living in the EU.