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Company registration in Czech Republic

Photo 1 - Company registration in Czech Republic

About Czech Republic

The Czech Republic – is a country, actually located in the Central Europe. The country is bordered by Poland in the north, by Germany in the north-west and in the west, by Austria in the south and by Slovakia in the east.

 

Czech companies are actively involved in trade intermediary schemes, and the jurisdiction is increasingly used in order to optimize taxation.

 

We draw your attention to the fact that sometimes you can find such a notion as "offshore" Czech Republic. At the same time, the country has never been included in the black lists of any country in the world. Taking into account this fact, it will be the obvious advantage of the above-mentioned jurisdiction for the foreign banks that prefers to work with prestigious jurisdictions rather than offshore.

ADVANTAGES OF OPENING A COMPANY IN CZECH REPUBLIC:

  • The Czech Republic has a great image, because has never been indicated in blacklisted countries
  • The country has a closed register of beneficial owners
  • High confidence in the founders of the company
  • Simple procedure for obtaining a VAT number
  • Company’s registration in the Czech Republic enables not only to run business in Europe but also to get real property in Czechia and to get residence permit
  • Predictability of tax legislation, since most of the proposed changes are announced several years in advance
LEGISLATION

The Law on Commercial Corporations regulates the establishment and operation of firms in the Czech Republic.

Types of companies

The following types of companies are the most popular in Czechia:

  • Limited liability Company (Spolecnost s Rucenim Omezenym s.r.o.).
  • Joint Stock company (Akciova Spolecnost a.s.).

Limited liability company (s.r.o.) – is the most attractive form for foreigners interested in legal presence within the Czech Republic. This type is popular due to its speed of registration terms, liberal reporting system and simplicity of management. 

Photo 1 - Company registration in Czech Republic

COMPANY REGISTRATION IN CZECH REPUBLIC: requirements

LIMITED LIABILITY COMPANY (S.R.O.):
  • The minimum authorized capital is 1 CZK (approximately 0,04 euros). Usually the authorized capital is at least 10 CZK and must be paid before the registration of the company to the deposit administrator who is appointed at the founding meeting. After opening a bank account, the deposit administrator contribute s the authorized share capital into the company's current account. The authorized capital is divided into units (shares).
  • Directors - at least one natural or legal person, there are no residency requirements.
  • Shareholders - at least one individual or legal entity, there are no residency requirements. In this case, instead of the memorandum of association, the founder is obliged to provide the state registrar with a unilateral decision to establish the company.
  • Publicly available information - company name, company identification number, legal address, directors, shareholders (shareholders), type of activity, authorized capital, financial statements.
  • Information about the beneficiaries is submitted to the Register of Actual Owners of Companies in the Czech Republic, which is closed (information is available only upon request to the judicial, law enforcement and tax authorities of the country).
  • Firm is obliged to keep accounting records and submit financial statements annually.
JOINT STOCK COMPANY (A.S.):
  • The minimum authorized capital is 2 million CZK (approximately 80 000 EUR) for a closed joint stock company and 20 million CZK for an open joint stock company. When registering a new company in the Czech Republic, the authorized capital of the company must be fully paid.
  • Bearer stocks are prohibited.
  • Directors - at least one natural or legal person, there are no residency requirements.
  • Shareholders - at least one natural or legal person, there are no residency requirements.
  • A joint-stock company in the Czech Republic may have a Supervisory Board, which must be attended by at least one person. It can be an individual or a legal entity, for which there are no residency requirements.
  • Publicly available information - company name, company identification number, legal address, directors, Supervisory Board, shareholders (only if there is one sole shareholder who holds the whole block of stocks), type of activity, share capital, financial statements.
  • Information about the beneficiaries is submitted to the Register of Actual Owners of Companies in the Czech Republic, which is closed (information is available only upon request to the judicial, law enforcement and tax authorities of the country).
  • Czech joint stock companies are obliged to keep accounting records and submit annual financial statements.
REPORTING

The end of the fiscal year in the Czech Republic usually occurs on December 31, but the company can choose another reporting date (the interval should not exceed 12 calendar months).

Entrepreneurs are required to submit income tax returns within 3 months after the end of the tax period, which is usually a calendar year, i.e. until March 31.

If the company has official employees, then it is necessary to submit monthly reports to the social insurance, health insurance, and income tax reports of individuals.

VAT report is also submitted monthly.

For large companies and joint-stock companies, an annual audit is also required.

A company is considered large if two of three conditions are met:

  • turnover over 80 million CZK;
  • more than 25 employees;
  • assets exceed 45 million CZK.
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TAXATION

A positive feature of Czech tax legislation is its predictability. All changes in legislative regulation are announced a year or two in advance.

The corporate income tax is 21%.

Capital gains are subject to general corporate tax.

VAT - 21% (may apply reduced rates of 15% and 10%).

A legal entity must be registered as a VAT payer in the Czech Republic as soon as its annual turnover exceeds CZK 1 million during the last 12 consecutive calendar months, with the exception of those legal entities that carry out transactions that are exempt from taxation.

Tax on dividends, royalties, interests - 15%.

If an agreement on avoidance of double taxation is signed between the Czech Republic and the country of the recipient of dividends, the norms of this agreement are used to pay tax on dividends, since it has supreme force over national legislation.

Personal income tax - 15%.

Tax payment deadlines:

Corporate tax should be pay until March 31 of the year following the reporting year.

VAT is paid by the 25th day of the month following the reporting month.

It is quite difficult to register a company in the Czech Republic on your own because you need to know all the legal and tax requirements for local businesses, so our lawyers will provide you with professional support for registering your business.

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DOUBLE TAX AVOIDANCE AGREEMENTS

The Czech Republic has signed over 80 bilateral tax conventions, including with Ukraine.

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If you want to buy an offshore company in the Czech Republic, please contact our lawyers for advice:

+38 (098) 737-88-88

We will help you register a company in the Czech Republic, for example, in Prague, or any other jurisdiction of your choice. Opening and registering a business in the Czech Republic together with Campio Group is a profitable and cost-effective solution.

The cost of registering a company in the Czech Republic is determined specifically for each business and its features, so get the final price in a commercial offer after all the details have been clarified by our lawyer.

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