Doing business in the Czech Republic is very similar to other countries in the European Union. In this article, we will explain the general business environment and practical steps to set up a business here.
Basic facts about Czech Republic
The Czech Republic economy is one of the wealthiest and stablest in the CEE region with a well-developed infrastructure.
- Population: 10.5 million (growth 0.1% per year)
- Main cities: Prague, Brno, Ostrava, Pilsen
- Top companies: Skoda Auto (cars), CEZ (electricity), Agrofert (agriculture), RWE (Oil&gas), Foxconn (electronics), Unipetrol (chemicals), Hyundai (cars);
- Business tax rate: 19%;
- GDP: 432 billion US$; GDP per capita: 40400 US$; growth 2.1% per year
- Unemployment: 2.2%
There are many reasons to start a business in the Czech Republic – the country is located in the center of Europe. It is the crossroads of many international routes and a transport hub. The market is very competitive and most international companies have their Czech branches too. Another reason is the skilled workforce or low living expenses.
Business company structures in Czech Republic
- Limited Liability Company (s.r.o.)
- Joint Stock Company (a.s.)
- Branch Office
- Joint Venture
- Limited Partnership (k.s.)
- General Commercial Partnership (v.o.s)
Most companies use the S.R.O. structure (non-stock, LLC) which is simple and easier to start. This is what we usually recommend to our clients too. This company type is suitable for the smallest companies, but also the Czech branches of big global corporations use it (Coca Cola, Microsoft, Google, etc.). You would need to have a special reasons to choose something else.
If you are a freelancer living in the Czech Republic, you don’t need to start a company. You can make business with you ‘Zivno’ which is a permission to make business as a natural person.
What you need to start a company in the Czech Republic
We recommend to make the following steps before starting the company officially:
1. A company representative
You will probably need a person responsible for the company’s operation. Also Czech authorities require a contact person of the new company – it can be either a Czech resident or a foreign country resident.
2. Legal address for your business
Your new company will need to have a legal address of residence. Most foreign companies place their Czech branches to the capital Prague. You can choose from many kinds – from virtual services with mail box and a phone assistance, single office room to fully-equipped offices in business parks.
Even if it’s not mandatory and the process of starting a new company is quite straightforward, we recommend finding a Czech attorney who can help with specific topics – at the start or during your business activities. Their charges are usually hourly-based, not monthly flat fees.
There are many companies offering starter packages with general templates for company documents, or even ready-made companies. We don’t recommend these services as every business is different and need an individual approach. The costs of starting a new company are not very high so you don’t need to risk – get an attorney.
Czech domain name (.CZ)
Check the .CZ version of your domain name and register it as soon as possible. It’s about 15 US$ per year and you can use any international or Czech registrar (GoDaddy, Domena.cz, etc.).