The Czech Republic turns out to be a fairly convenient market both to look for work and to decide to start a business. The main advantages that an entrepreneur may experience by deciding to open company in Czech Republic, are a reduced impact of taxes on both natural and legal persons, lower consumption costs, and less complex bureaucratic procedures.
In addition to this, the Government of the Czech Republic facilitates the commercial exchange and the entry of foreign entities into its territory, to encourage the establishment of an increasingly international market. But what types of companies can you open in the Czech Republic? And what are the main procedures for opening up?
How to open company in Czech Republic?
However, those wishing to embark on an entrepreneurial adventure abroad must know a series of preliminary information, such as the cost of taxes, labor, utilities, and the various ways to start their own business. Therefore, to be able to open companies in the Czech Republic it is first necessary to learn what are the different types of companies that can be opened, the costs of taxes, employees, and finally the practical process that will have to be faced (bureaucracy is less, but there is!).
Types of companies you can open
Open company in Czech Republic: below we list the various types of companies that you can open, remembering that you can start some of them also from Italy, without going physically to the Czech territory:
- Partnerships (v.o.s)
- Limited partnership (k.s.)
- Limited liability company (s.r.o.)
- Public limited companies (s.a.)
- Cooperative society
- European society
Open company in Czech Republic: who can do it?
In the Czech Republic, you can start a business both as a natural person, that is, as a simple self-employed person, and as a legal person, then partnerships, capital, or cooperatives. Below we will list the various types of activities that you can start according to your status, the procedures for making them recognized by Czech law, and some useful tips.
Start a business: natural persons
Starting a business as self-employed is quite simple. Are considered entrepreneurs-natural persons:
- Persons engaged in business activity based on an operating license;
- Persons entered in the commercial register (at their request or by law if the amount of revenue or income – without VAT – has reached or exceeded on average the limit of 120 million Czech crowns in the last two consecutive accounting periods;
- Persons carrying out a business activity based on a different authorization under the special rule;
- Private growers registered in the appropriate evidence
There are different types of activities that can obtain an operating license. The main occupations covered by the Czech legislation may be of four types:
- Free;
- Captives;
- Artisanal;
- Concession.
These four groups include detailed lists of all types of activities. The first three items correspond to the so-called “notification trades”: this means that the future entrepreneur is only required to “notify”, that is to say, to communicate to the Licensing Office the type of trade that will be carried out without any consent or authorization. In addition, the basic requirements necessary for the opening of the business must be met, namely: the age of majority, the ability to act and carry out legal acts, and a clean criminal record.
The notification shall be submitted using a form to be completed available on the Licensing Office’s web pages. Together with the form, any other documents required by the law depending on the type of profession notified, such as documents attesting to professional competence (education and/or experience in the field) must be submitted. Finally, with the payment of the sum of 1000 Czech crowns, the notification procedure is completed and the Extract from the Licence Register is expected to be issued, which the Licence Office is required to issue within five days of the filing of the documents; After that, the subject can start the business.
Start a business: legal entities
There are two macro-groups of companies that can be opened in the Czech Republic. On the one hand, cooperative societies, that is, companies formed by an unlimited number of persons (minimum 5), whose share capital consists of contributions. The company is established for business purposes or to meet the needs of its members.
On the other hand, we have trading companies, which in turn are divided into two groups. Generally, the trading company is formed through a social contract signed by all the founders. In case the founder is unique, the social contract is replaced by the articles of association.
- Partnerships (which include v.o.s. – partnerships and k.s. – limited partnerships): in which there is the personal participation in the management of the company and the unlimited guarantee of the partners against the obligations of the company. These companies are characterized by the unlimited and joint and several liabilities of the members.
- Limited companies (which include s.r.o. – limited companies and a.s. – limited companies): companies in which there is an obligation to make a contribution that will constitute the share capital of the company. The amount of the contribution is determined by the law and differs according to the type of company.
Open company in Czech Republic: procedures
The two main bureaucratic procedures that will have to be taken into account if you want to open a company in the Czech Republic are: registration with the Commercial Register of Companies and obtaining an operating license, an indispensable document that differs according to the type of activity carried out.
- All legal persons listed above in the Law of Companies and Cooperatives must be registered in the Commercial Register of Companies, a public list held by the competent court and subject to the Ministry of Justice of the Czech Republic. Under Czech law, the company is born on the day it is registered in the Commercial Register of Companies and is extinguished with its cancellation.
- An Operating Licence (“živnostenský list”) is mandatory for all entrepreneurs to undertake business activities, whether they are natural or legal persons, and therefore consists in a de facto authorization to carry out a given business activity.
Opening a business in the Czech Republic is indeed simpler and faster, at least compared to Italian procedures, but in any case, it provides some precautions. For example, the time required to start an s.r.o. is about two weeks. After registration at a notary office, you will need to open a business account at a Czech bank. Finally, it is very important to pay attention to the translation of documents: given the difficulty of the Czech language, it is preferable to contact a sworn translator.
Savino&Partners a.s.
