- 10 June 2019
- Posted by: badamowicz
- Category: News
Opening and running a business in the Czech Republic
Entrepreneurs from other countries to the Czech Republic are attracted not only by the good reputation of its market, but also by a stable economy. In 2019, according to the Doing Business agency, the Czech Republic took 30th place among 190 countries in the “Beneficial conditions for starting a business” ranking. The economy of the country is actively developing and attracts investors from all over the world. Foreign business has support at the state level, which creates very favorable conditions. Let’s analyze in more detail what benefits you can get when starting your own business in the Czech Republic.
The advantages of opening a company in the Czech Republic
– The potential sales market is constantly growing due to the proximity of such countries as Germany, Poland, Slovakia and Austria.
– A legal framework for entrepreneurs compatible with the EU
– Easy registration of the company
– EU membership
– Possibility to get loans and low interest rates on loans
– Private enterprises in the Czech Republic have a big impact on the economy of the country (the main employers are private entrepreneurs)
– One third of all citizens work in private enterprises
– Low level of corruption
– A convenient tax system
– Transparency of doing business
– No excise tax on cars and the possibility of booking 100% VAT
What is needed to open a company in the Czech Republic
In order to open a company in the Czech Republic, it will be necessary to prepare a package of documents and decide which of the forms of ownership is better in a given situation. There are several forms of running a business in the Czech Republic. Here are the three most important:
1. A limited liability company. Sp o. O. May have up to 50 founders, the president of this company may be a foreigner. The size of the target capital can be from 1 Czech crown and above.
2. Open or closed joint-stock company. The target capital of this company is from CZK 2 million for a closed company and 20 million PLN for an open company.
To register a company in the Czech Republic, you must provide the following documents:
– Personal data of future partners
– A certificate stating that you do not have any previous convictions.
– Corruption certificate translated by a sworn translator, prepared not earlier than three months before submitting documents.
– Document confirming permanent stay (no more than 3 months) of future shareholders of the Czech company. This document should be drawn up on the basis of art. 45 of the Act on Registration of Population. This document must be translated by a sworn translator. In the presence of a co-founder, it will be necessary to provide an excerpt from the KRS register of the enterprise, this document must also be translated by a sworn translator.
– Company name certified by a notary.
The next registration step will be carried out based on the following activities:
– Meetings of shareholders who will determine the main aspects of the wording of the card
– Payments of authorized capital and placing it on a special account
– Definition and subsequent communication regarding the type of business of the company in the Office of Economic Activity
– Registration of the legal address of the company
The process of creating and registering a company in the Czech Republic, such as Sp z o o, will take up to 7 days. The cost of setting up a company will be about 2,500 euros.
Taxes in the Czech Republic
The tax system in the Czech Republic is adapted to EU standards and is based on the principles of a market economy. Despite some difficulties, tax costs can be optimized with the right approach.
1. VAT – the basic rate is 21%, for some types of goods a reduced rate applies, 15.10 and 0%
2. Income tax – basic rate 19%
3. Personal income tax – the basic rate is 15%, if the annual income exceeds 61 078 euro, then an additional 7% must be paid out of the amount exceeding the tax base
4. Deductions for social and medical insurance – employer (25 and 9%), employee (6.5 and 4.5%)
5. Real estate tax – 15% of the transaction amount.
6. Dividend tax – 15% rate