The Czech Republic is located in Europe and is a member state of the European Union. The country is in the center of Europe and is provided with infrastructure and financial services, alongside political stability, and a regulatory framework to support the business activities of local and foreign companies and investors.
In the Czech Republic, one of the most common types of business entities is the Limited Liability Company (S.R.O) and established by foreign investors. Foreign investors choose this type of company to meet their business plans and personal preference.
Advantages of limited liability company in the Czech Republic
- Simple company formation
- The minimum requirements of the contribution of each shareholder are CZK 1
- Wide scope of business activities and plans, multiple investors are involved in the business easily
- Transfer of shares is easy
- Simple organizational structure
- Tax optimization
- Shareholders are only accountable for their registered outstanding contribution
The structure of the organization
The supreme body consists of either a general meeting of shareholders or a sole shareholder who is responsible for exercising the powers of the General Meeting.
The statutory body consists of the executive directors appointed by the general meeting.
A supervisory board is optional and the role of the members of the supervisory board is to supervise the executive directors, their reports, various documents, and accounts.
Registration steps
Steps on the incorporation of your limited liability company are:
Business name
Choose a name and ensure that the preferred name to be registered with the commercial register is unique and available on their database. It should differ from other companies. There are some conventions to be noted when registering the company such as:
- There should be at least 3 unique characters in your business name
- Only the basic letters of the alphabet are considered different
- Geographic location is not a merit to differentiate your business name
Memorandum of Association/Foundation
The memorandum of association/foundation deed must be adopted by the notary public. The document should state the business activities of the company and the shareholders.
Registered address
Consent to the provision of a registered office address for the company must be arranged, the company must have an address where mail and other information will be directed.
Trade license
A trade license is required to be obtained to carry out business activities.
Bank account
A corporate account is only needed when the contribution amount is more than CZK 20,000 and it is paid to the administrator for contribution.
Registration of the company in the commercial registry
The business must be registered in a commercial registry at the district court and the time for incorporation is approximately 2-3 weeks after receiving the document for incorporation.
Other obligations after incorporation
Some other required obligations are:
Registration of corporate income tax
This is registered within 15 days from the company’s registration day in the commercial register.
VAT registration
VAT registration can be done voluntarily if the annual turnover is below CZK 1,000,000 but is necessary if it exceeds such an amount.
Ultimate beneficial owner (UBO) registration
The business corporation needs to register its beneficial owners in the Register of Beneficial owners immediately after the incorporation of the company, the company will be sanctioned if they fail to do so.
Insurance Registration
If there is an employment commencement and termination, the employer must notify the office of the Czech Social Security Administration on the date.
Personal income registration
Employers must register with the local tax office for withholding income tax within 15 days of employment commencement.
Opening of a bank account
A current bank account must be created for the country after incorporation.
