Company registration & ready-made company

Major Forms of Legal and Business Presence

If you intend to enter the Czech Republic by establishing your business presence in this country, this may be accomplished in one of the next forms:

• Limited Liability Company (LLC) – a vehicle designated to conduct most types of business activities. It is convenient from this perspective and also from the point that its statutory capital should be only CZK1. The liability of shareholders, in this case, is restricted to the value of their investments only.

• Joint Stock Company – an entity designated to involve extra financing and requires the initial statutory capital of CZK2 million. The liability of the shareholders, in this case, is limited to the values of the owned shares that also can be transferred. The types of shares may vary and envisage the respective rights for their owners.

• General Partnership — a business formation established and operated by at least two persons whose liability for the results of all business transactions is not limited in any way, even their personal property can be at risk.

• Limited Partnership — a business arrangement that is run by (i) one or more general partners whose liability is not restricted in any way, and (ii) one or more limited partners who take financial responsibility for all results of the partnership’s operation within the invested amounts only.

• Representative offices or branches – foreign legal entities may find these options suitable for exploring local business opportunities and conducting certain scope of business transactions respectively.

Company Registration Requirements and Steps

The registration of a company in the Czech Republic, a limited liability company, for instance, may require passing these preliminary steps:

1. Identifying major business objectives for doing business in the Czech Republic.

2. Collecting data about founders and beneficial owners.

3. Choosing and verifying the business name for a prospective entity.

4. Drafting and notarizing the vehicle’s memorandum and articles of association.

5. Arranging a local business address.

6. Submitting documents required for the registration to the respective local court. The data about the newly-founded entity will be reflected in the Commercial Register.

7. Registration for tax and social security purposes.

8. Obtaining extra permits and licenses (optionally – the exact types of your future activities should be considered).

This is a general overview of the LLC registration procedure. But, in certain cases, minor variations of this procedure may appear. Our specialists are ready to consider the peculiarities of your concrete case and suggest more detailed preliminary guidance.

Tax System in the Czech Republic

• Corporate income tax (CIT) rate – 19 %

• Personal income tax (PIT) rate – (i) basic – 15%, and (ii) increased – 23 % for income exceeding the amount of CZK 1.7 million

• VAT – 21 %

• Withholding tax rates (basic, applied to non-residents) – (i) dividends – 15 %, (ii) interests – 15%, (ii) royalties – 15 %.

• Capital gains tax rates – (i) corporate – equals to

  the standard CIT rate, (ii) individual – equals to the standard PIT rate.