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FAQs on Setting up a Business in the Czech Republic

By 27 October 2022December 5th, 2022No Comments

Many questions arise when you want to set up a business in the Czech Republic. This problem is encountered by many investors who have started to think about Company Formation in the Czech Republic. The whole process can be shortened and significantly accelerated by knowing the answers to the questions that bother us. In this article, we will talk about company formation in the Czech Republic and the FAQ. We invite you to read the following article from the Gurcan Journal

WHICH LEGAL FORM IS THE RIGHT ONE FOR YOUR BUSINESS START-UP IN THE CZECH REPUBLIC?

The majority of investors opt to form a Czech legal entity. The two most common types are the limited liability corporation (LLC) and the joint-stock company (JSC).

HOW MUCH SHOULD THE START-UP CAPITAL BE WHEN FOUNDING A COMPANY IN THE CZECH REPUBLIC?

• The mandatory minimum amount of registered capital, which is CZK 1 per shareholder in an LLC and CZK 2,000,000/EUR 80,000 in total for a JSC.
• Corporate governance is more complex in the case of a JSC (mainly in a JSC with a dualistic structure).
• Transferring shares in a JSC can be easier than transferring ownership interests in an LLC, where the transfer is normally subject to general meeting permission.
An LLC’s shareholders are accountable for the company’s obligations up to the number of their unpaid contributions, whereas JSC stockholders are not.

WHICH COSTS WILL YOU INCUR IF YOU DECIDE TO START A BUSINESS IN THE CZECH REPUBLIC?

Opening a bank account in the Czech Republic, sending contributions to the registered capital (at least partially, as indicated below), and registering a trade license are all necessary first steps. Once all of the relevant formalities have been completed, the company can be registered in the Commercial Register and formally begin operations. A notary can register the company in the Commercial Register immediately or by filing a registration motion with a registration court. Branch office, Estimated local fees(excluding legal, tax, and other advisory services)
• Branch Office: No less than EUR 300
• LLC: No less than EUR 470
• JSC: No less than EUR 1,106 + registered capital of EUR 80,000 (min)

It is also worth noting that the registered capital does not have to be fully paid up before the company can be registered in the Commercial Register. Before filing the application for registration with the Commercial Register for an LLC, 30% of every monetary contribution and the entire contribution premium must be paid, and 30% of the par value of shares and the entire share premium must be paid before filing the application for registration with the Commercial Register for a JSC.

Gurcan Consultancy will assist you with the accounting taxation part procedure.

WHICH DOCUMENTS ARE REQUIRED FOR THE ESTABLISHMENT OF A COMPANY IN THE CZECH REPUBLIC?

• Company business name
• Address of registered office, along with its proof (lease agreement)
• Details of the activities to be carried out by the company
• Memorandum and Articles of Association (MAA)
• Trade authorization certificate
• Specimen signatures of shareholders and directors
• Proof ofdepositedbankcapital
• Extract from the Criminal Registry for each member of the company

So far we have assisted over 400 companies. Check out our experiences.

CAN THE FOUNDER BE THE DIRECTOR OF THE COMPANY AT THE SAME TIME?

A natural person or a legal organization may become a director in general. Only a natural person may be appointed as a statutory director in a JSC with a monistic structure. There are no residency or nationality limitations on who can become a director.
A director may not be a director of more than one company engaged in the same or similar commercial activity unless the firms are owned by the same holding company (i.e. they are part of one corporate group). This restriction, however, may be lifted with the permission of all shareholders.
• The director can be the founder of the company.
• According to the law, the director can nothave a work permit in the company but work there according to the contract as the natural person who has agreed with his company.

HOW LONG DOES IT TAKE TO SET UP A COMPANY IN THE CZECH REPUBLIC?

The timetable varies depending on the situation. First and foremost, the articles of organization must be adopted – this must be done in the form of a notarial deed. Getting professional assistance is an essential foundation for starting a business in the Czech Republic. We will complete the registration process for your company in only 1 month.

Gurcan Partners is a corporate member of 

CAN A FOREIGN CITIZEN BE A FOUNDER AND DIRECTOR OF A CZECH COMPANY?

The foreigner (the owner and co-owner of the company in the Czech Republic) has practically complete freedom to conduct business in the country and within the European Union. Because of his passport, the company’s owner can now buy real estate in the Czech Republic.
After the visa has been extended for more than 90 days, the foreigner is eligible for a two-year residence permit in the Czech Republic. Permission is provided based on the conduct of the business activity.
After five years of residency in the Czech Republic, the foreigner is eligible for permanent residence and European resident status.

WHERE CAN THE BUSINESS ADDRESS BE LOCATED IN PRINCIPLE?

A legal address is the physical location of a legal person who is listed on the Commercial Register and is mentioned in authorized papers. The applicant who submits the documents to the register decides on a legal location.
Legal addresses for enterprises in the Czech Republic are not restricted. For the time being, there is only one condition: if a company’s legal address is in an apartment, the use of such a unit must not disrupt the peace and order in the building. A legal location describes the territory to which a corporation belongs in terms of state entities. This address is also used by the Czech Commercial Court and the Czech Financial Institution (the tax inspectorate).

IS PHYSICAL PRESENCE NECESSARY WHEN ESTABLISHING A COMPANY IN THE CZECH REPUBLIC?

It is possible to open a company remotely, without a personal visit. While starting the procedure our professional team will assist you in the entire process of setting up a company in the Czech Republic. Be sure of a good start to your business in the Czech Republic and contact us.

FAQs on Setting up a Business in the Czech Republic 

Simge Ayse Pala

All rights reserved. All rights of the FAQs on Setting up a Business in the Czech Republic article belong to Gurcan Partners International Law Firm. The author has no responsibility for the information in this article. This article is prepared just to inform.

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