The Czech Republic, located in the heart of Europe, has long been an attractive destination for foreigners looking to start a business. As a member of the European Union, it offers a safe and favorable business environment, a skilled workforce, a stable legal system, a high level of safety, a good quality of life, and a strategic location. With a stable economy and developed infrastructure, the Czech Republic provides a peaceful setting for investors to conduct their business. It serves as a gateway to the vast EU market of 440 million consumers, making it an ideal choice for companies seeking to expand their horizons.
When considering establishing a business in the Czech Republic, there are certain considerations based on citizenship. Individuals from third countries including India need a visa for stays exceeding 90 days, followed by a long-term residence permit.
The Czech Republic offers various business forms, including self-employment (trade license), General Commercial Partnership (rare), Limited Partnership (limited and general partners), Limited Liability Company (shareholder liability limited to unpaid contributions), and Joint Stock Company (complex, high capital requirement). Additionally, a Registered Branch of a Foreign Company provides a simplified process, although it does not have separate legal status. The establishment process involves two phases: first, establishing the company through the adoption of a notary deed, and second, registering the company in the commercial register. With no minimum registered capital requirement for a limited liability company, it is most common choice, and it is easy to establish and register such a company, typically taking around 2 weeks.
Once the business is established, the next steps include tax registration (corporate income tax at 19%, rising to 21% in 2024), opening a bank account, and completing necessary legal preparations for successful operations.
The Czech Republic is open for foreign investors and offers government incentives for various sectors, including technology centres, business support service centres, strategic product manufacturing, and the overall manufacturing industry. These incentives may include income tax relief for up to ten years for new companies embarking on investment projects. Existing companies expanding their investment projects may receive partial tax relief. Strategic projects may also qualify for a cash grant of up to 20% of the capital investment. In regions with high unemployment rates, employment subsidies in the form of grants for job creation and training are available, specifically for technology centres.
Article written by:
Eliška Valíčková & Maxim Hirsch
PARTNER
ME:LEGAL s.r.o., advokátní kancelář
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