Setting up business In Czechia – The basics

Setting up business in Czechia – The basics

No ‘Doing Business Guide’ can help you fully navigate for your particular situation and timing. It is worth reading a few guides and then collaborating with the right partners for business. Feel free to use the below to confirm your checklist is complete and compare answers with other sources. Contact us for a free of charge initial consultation.

Setting up business In Czechia – The basics


Czech Republic


Setting up business, Initial consultation, Branch, Subsidiary, Share capital, Incorporation, Tax rates, Statutory audit

1  Pros and cons of branch versus subsidiary

Subsidiary is the most common way to go forward. The parent is not exposed to the business and tax risks accumulated in the subsidiary.

Branch is easier and faster to wind up. It enables tax free profit transfers to non-EU founders.


2  Minimum share capital

CZK 2 million for joint stock and CZK 1 for limited liability company. In practice, LTD mostly opt for at least CZK 20.000 share capital.


3  Taxation of director’s remuneration

Director’s remuneration is taxed same as employee’s including local social and health insurance changes unless in a cross-border situation. Director’s do not need to receive remuneration.


4  Incorporation documents

Foreign shareholders and directors most commonly will need to provide:

  • Extract from penal register
  • Extract from commercial register
  • Copy of passport
  • Landlord approval for registered seat
  • Signatures on POAs and affidavits


5  Physical presence during incorporation

Physical presence of director is not required until regular bank accounts shall be opened.


6  Local director requirement

Appointment of local director is not required. It may be considered for practical purposes, e.g. for bank account opening in times of travel restrictions. Nominee directors are used for operating businesses where local employees cannot be appointed to fill in the director role. General proxy or ‘procurist’ solutions are also possible.


7  Time schedule for incorporation

  • Collecting documents and signatures from shareholder and directors – usually 2-4 weeks
  • Drafting POAs and affidavits – usually runs in parallel
  • Notarization of articles of association – plus 1 week
  • Obtaining business license (only needed for certain trades) – time requirement depending on trade – no extra time for basic trades, several weeks or even months for regulated trades
  • Setting up of basic capital bank account – few days in parallel
  • Registration in commercial register – plus 1 week
  • VAT registration – plus 2-4 weeks from application, application requires documents proving substance of business (collection of these may delay the process)


8  Virtual or real office

Registering a seat does not require rental contract. Using a virtual address is very common. Registered seat at a very popular ‘virtual address’ may slow down VAT registration.


9  Which local bank to choose for bank account

Most popular among our clients are local subsidiaries of:

  • Belgian KBC (CSOB),
  • French Societe General (Komercni Banka),
  • Austrian Erste Bank (Ceska Sporitelna) and
  • Austrian Raiffeisen Bank (operating under same brand in Czechia).


10  Important tax rates

Standard Corporate Tax Rate – 19%

Standard VAT Rate – 21%


11  VAT refund practices

VAT refunds are usually distributed automatically and on time by the tax authorities (30 days after the filing deadline of 25th day of the following month). In some cases the tax authorities require scans of invoices and excel reports or in the worst cases proof of supplies and their purpose and use for business.


12  Statutory audit requirement

Statutory audit of an LTD is required after exceeding thresholds of 2 out of 3 criteria in 2 consecutive years – 50 employees, CZK 80 million turnover, CZK 40 million balance sheet value.



Other blog posts from Czechia:


10 peculiarities of payroll in Czechia


7 Basics of Czech employee holiday entitlement


Hiring employees in Czechia – 8 basic rules