How to register a company in the Czech Republic

A foreign entrepreneur can choose one of two forms of doing business in the Czech Republic—OSVČ (individual entrepreneur) or s.r.o. (limited liability company).

Options for registering an IT company in the Czech Republic

• OSVČ 

Any citizen with active legal capacity, without a criminal record and at least 18 years old, who is legally staying in the Czech Republic, can open OSVČ. That is, you need to obtain a residence permit, work, or business visa. Individual entrepreneurship is suitable for those who are going to run a business in a simplified form. The advantage of this form is that you do not need registered capital, and registration takes a minimum time. In addition, there are significant tax benefits. Disadvantages—there is no state health and social insurance. Also, registering for a residence permit is more complicated than for those who open s.r.o.

You can apply for this type of business at the Trades Licensing Office (živnostenský úřad).

• s.r.o.—Simplified version of registration, compared to OSVČ.

Suitable for a business of any size. Here are the advantages of this type of business:

• No need to submit a business plan to the state authorities during registration.
• Inexpensive maintenance of the company. 
• s.r.o. allows getting a residence permit for a period of 1 to 2 years.
• Since 2014, it has been legal to open s.r.o. with authorized capital even of 1 crown (before it was at least 200000 CZK).
• Registration takes from 2 weeks to 1,5 months.

The disadvantages are as follows:

• Difficulties with opening a bank account without the knowledge of the Czech language. 
• Difficulties with the closure of the business, which takes at least 5 months.

Buying a ready-made company in Czech Republic

This option is faster than the registration—registration actions have already been done, and only the owner of the existing company changes.

The period of re-registration is about 14 days.

Documents for the registration of the legal entity

• Documents confirming your identity and legality of stay in the Czech Republic—passport, residence permit, visa, biometric card.
• Receipt of payment of state duty
• From directors—non-conviction certificates from the country of permanent residence (Certificates of non-conviction must be apostilled) or responsible statements from citizens of Ukraine, signed at the local notary.
• From the founders—notarized powers of attorney for registration.
• Maiden name of the founder/director

This list may vary depending on the request of state authorities.

Common mistakes:

• Buying a ready-made company from a suspicious seller at a low price. Almost always, such an offer means fraud, especially if the business structure for sale brings a stable and tangible income. After all, you are unlikely to be able to trace the legal clearance yourself and find potential problems that often do not lie on the surface. But if we offer you an operating project, you can be calm in this case.
• Misunderstanding the mentality of the Czechs. It is believed that any means are good for promoting a company, including the not entirely legal ones. In addition, companies often offer specific goods and services deliberately “save” on their quality, especially in the formative stage. The calculation, in this case, is simple: you get working capital, which can immediately be used to develop the business. Alas, such a scheme does not work here: Czechs will never turn to a supplier if they have been offered a substandard product or service at least once.

The process of obtaining a residence permit through business immigration in Czech

• Signing a contract. 
• Submission of documents to the Czech Consulate for a visa category D (at the place of registration). We recommend you go to the Czech Republic as soon as you get your visa.
• Three months after the company begins working and paying taxes, you can apply for a residence permit. 
• After about 1-3 months, you will receive notification of the residence permit. After that, you have to come to the Czech Republic for 5-8 working days to submit your fingerprints. The residence permit will be valid for 1 to 2 years, after which it can be renewed for 2 years and then for another 2 years. After 5 years, you can apply for a permanent residence permit for 5 years (for this, you will also need to pass the Czech language test). After 10 years of residence in the Czech Republic, you can apply for Czech citizenship.

To successfully start a business in the Czech Republic, it is important for entrepreneurs to understand, even at the planning stage, that they will not be able to make a fortune here quickly: a profit of 6% is already considered good.

For comparison, the average rate on bank deposits varies between 2% and 4%. On the other hand, going broke with competent tax and accounting support is also quite problematic, thanks to the sound policy of the state. Taxes on the maintenance and sale of real estate owned by a legal entity is extremely reduced. The bonuses of starting your own business include obtaining a business visa to the Czech Republic and a residence permit for the director of an existing company.

Our working hours are 9:00-19:00 from Monday to Friday. If you need legal advice for run an IT business in the Czech Republic, send a request through the form below or a message on Telegram/Viber, Whatsapp for consultations.