THE ART OF BEING LOCAL
IN CZECH REPUPLIC
Company formation in the Czech Republic
The Czech Republic has established itself as an attractive location for company start-ups. With low taxes, low start-up costs and a central location in Europe, the country offers ideal conditions for entrepreneurs. A well-developed infrastructure, qualified specialists and comparatively low labour costs make it particularly competitive. Companies also benefit from economic stability and access to the EU single market. This combination of advantages makes the Czech Republic a promising destination for investors and start-ups.
Petr Huňař is statutory representative of INTERGEST CZ s.r.o. Petr has extensive experience in providing services in the field of Tax advisory, accounting advisory and ERP system implementations, especially FI, MM, SD and PP modules. He has been focusing on the delivering of accounting, tax and auditing services and he was a member of implementation teams for many ERP systems like Odoo, SAP a ABRA. Petr focuses on the consulting services especially for manufacturing companies, wholesalers, retailers and companies providing services in information technology.
Advantages of setting up a company in the Czech Republic
Setting up a company in the Czech Republic has many advantages for entrepreneurs. The Czech Republic is considered an attractive location for company start-ups due to its stable economic situation, low corporate taxes and well-trained labour force.
The low corporate taxes are a decisive advantage when setting up a company in the Czech Republic. With a standardised tax rate of 19% for all income, the Czech Republic is one of the countries with the lowest corporate taxes in the European Union. In addition, the Czech Republic offers attractive tax benefits for newly established companies, which makes setting up and operating a company in the country financially attractive.
Furthermore, the Czech Republic has a well-educated labour force, which is particularly advantageous for companies in the technology and engineering sectors. The Czech Republic has a large number of universities and technical colleges that train qualified specialists. In addition, labour costs for qualified workers are lower than in other European countries, which reduces personnel costs for companies.
Another advantage of setting up a company in the Czech Republic is the country's geographical location. The Czech Republic is located in the heart of Europe and is therefore an ideal starting point for companies operating in the European market. Thanks to its proximity to Germany, Austria, Poland and Slovakia, companies in the Czech Republic have access to a large sales market and can benefit from the well-developed transport and infrastructure networks.
Legal requirements and steps for setting up a company in the Czech Republic
Setting up a company in the Czech Republic is a relatively straightforward process, but requires compliance with certain legal requirements. The first step is to choose the right legal form, with the limited liability company (s.r.o.) being the most popular option for small and medium-sized enterprises. Alternatively, there are other company forms such as the public limited company (a.s.) or the sole proprietorship (živnostník).
The first step in founding a company is to reserve the company name and draw up the founding documents, which must be notarised. These include the articles of association and confirmation of payment of the share capital, which for an s.r.o. is at least CZK 1. This is followed by entry in the commercial register, which is applied for at the competent district court.
At the same time, companies must obtain a business licence, which, depending on the industry, requires either a registration or a special licence. After successful entry in the commercial register, tax registration with the Czech tax office follows, in particular for value added tax (VAT), if the company exceeds the relevant turnover limits or wishes to be voluntarily liable for VAT.
In addition, employers are obliged to register their employees for social security and health insurance. Compliance with accounting obligations under Czech commercial law is also essential, with many companies opting for an external accounting firm.
Thanks to clear legal requirements and digitalised processes, company formation in the Czech Republic can be completed in just a few weeks. With professional support from lawyers or business consultants, the process can be further accelerated and legal pitfalls avoided.
Tax aspects when setting up a company in the Czech Republic
Tax aspects play a key role when setting up a company in the Czech Republic. The country offers comparatively favourable tax conditions, which makes it particularly attractive for entrepreneurs.
Corporation tax in the Czech Republic is currently 19%, which is moderate by European standards. Reduced tax rates apply to some special types of income, such as certain investment funds. Sole traders, on the other hand, are subject to income tax, which varies progressively between 15% and 23%.
Companies based in the Czech Republic with a turnover of more than CZK 2 million (approx. EUR 80,000) per year are obliged to register for value added tax (VAT). The general VAT rate is 21%, while reduced rates of 15% or 10% apply to certain goods and services. Companies can also voluntarily register for VAT in order to utilise input tax deductions.
Other tax obligations relate to social security and health insurance contributions for employees. Employers pay around 34% of gross salary in social security contributions, while employees pay around 11%.
The Czech Republic also offers various tax benefits and incentives, particularly for research and development, investments in certain regions or innovative business models. Many companies also use holding structures to optimise tax benefits within the EU.
In order to optimally fulfil tax obligations and take advantage of possible benefits, it is advisable to consult an experienced tax advisor or accountant. With a well-planned tax strategy, companies in the Czech Republic can enjoy considerable financial benefits.
Company formation in the Czech Republic with Intergest
If you are planning to set up a company in the Czech Republic, Intergest offers you comprehensive support to make the process efficient and legally compliant. With our many years of experience, we accompany you through all the important steps - from the initial planning to the successful establishment of your company.
A key aspect is choosing the right legal form and registering with the relevant authorities. We will help you find the right corporate structure, take care of all the necessary registrations and ensure that your company complies with Czech tax and legal requirements.
The choice of location also plays a decisive role in your success. Our experts will help you analyse the best regions for your business and advise you on local funding opportunities and economic benefits.
We also help you to better understand the Czech market. With in-depth market analyses and our expertise in customer and competitor analysis, we identify opportunities for your company and find potential business partners.
To make your company formation as smooth as possible, we put our network of lawyers, tax advisors and business consultants at your disposal. With Intergest as your partner, you benefit from a professional and structured approach that saves you time and resources - so you can focus on growing your business.
Where to find Intergest Czech Republic?
InterGest Czech Republic office is located in Prague 5 Smichov. The international airport can be reached in about 30 minutes by taxi.InterGest Czech Republic has near contact with software and IT companies, tax advisors, notary offices, auditors and translation agencies. With their know-how and local network, they contribute to a perfect range of services for international clients.
