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Business Start-up Costs in Czech Republic

Business Start-up Costs in Czech Republic

Some of the steps that refer to the incorporation process may be free of charge, but most of them require the payment of a certain fee. Such fees may vary, in accordance with the documents needed for the registration, but also with the legal entity chosen by an investor. Our team of Czech lawyers assists in the incorporation process, as well as with the costs involved when opening a new business in Czech Republic.

After deciding to establish a business in the Czech Republic, one must determine the legal business structure. The primary choices include obtaining a self-employment business license (known as “živnostníci”), forming a limited liability company (“S.R.O., společnost s ručením omezeným”), or creating a joint-stock company (“A.S., akciová společnost”). Our lawyers can guide you about these businesses’ startup costs in the Republic

Business start-up expenses you should expect in Czech Republic

Several factors can influence the cost of starting a business in the Czech Republic. These factors include:

  • Legal structure: The type of legal structure you choose for your business, such as a sole proprietorship, limited liability company (s.r.o.), or joint-stock company (a.s.), can impact the registration and operational costs. Whatever structure you choose, our lawyers can guide you about its registration costs in Czech Republic;
  • Registration fees: There are fees associated with registering your business entity, obtaining a trade license, and completing other administrative requirements.
  • Capital requirements: Depending on the legal form of your business, you may need to provide a certain amount of share capital, which can affect initial costs. Our lawyers in Czeck Republic can guide you in detail about the required share capital.
  • Location: The cost of renting or purchasing office or commercial space can vary significantly depending on the location within the Czech Republic, with Prague generally being more expensive than other regions. The lawyers at our law firm in Czeck Republic can guide you about affordable office locations;
  • Industry and licensing: Some industries may require specific licenses or permits, which can add to the startup costs. Our Czeck lawyers can guide you if your business needs a license and permit.
  • Tax obligations: Being aware of and planning for tax obligations, including corporate income tax and value-added tax (VAT), is essential. You are welcome to get in touch with our attorneys in Czeck Republic if you have any questions about the tax system in this country.
  • Translations: If you need documents, contracts, or materials translated into Czech, translation services will incur costs.

It’s important to note that the specific costs can vary widely based on your business’s size, industry, and location within the Czech Republic. Conducting thorough research and seeking professional guidance can help you estimate and plan for these costs accurately. You are welcome to get legal information from experienced lawyers at our Czeck law firm.

Free of charge registration procedures in Czech Republic 

Some of the steps which have to be completed when opening a new company in Czech Republic are free of charge. For example, the company should be represented by a trading name, which has to be unique in the Czech territory. The procedure can be completed at the Ministry of Justice, by verifying the online data provided by the institution. In Czech Republic, the bank at which the investor opened a bank account to deposit the minimum share capital, must provide a confirmation in this sense, which is also free of charge

The new company should also be registered for tax and social security purposes and both procedures are also free. It is also important to know that the registration for each of these institutions lasts less than one day; our team of Czech attorneys can offer more details on these services. 

Registration costs in Czech Republic 

The final costs for the new businesses incorporated in Czech Republic are also set out in accordance with the legal entity of the company (some may require a larger share of paid-up capital). The company’s documents will have to be notarized by a public notary, which imposes a fee in accordance with the value of the capital. 

As such, the notaries request the following taxes:

  • 2% of the value, for a paid-up capital of up to CZK 100,000;
  • 1,2% of the value for capital up to CZK 500,000;
  • 0,6% – for a sum up to CZK 1,000,000;
  • 0,2% – for a sum of up to CZK 20,000,000. 

The incorporation of a business in Czech Republic can be handled by one of our advisors who can also help you register for VAT.

What are the costs at the Commercial Register?

Each business must be registered with the Commercial Register or the registration court for which a payment of CZK 6,000 is necessary. This fee applies to businesses that register for the first time in Czech Republic. It is good to know that joint stock companies are subject to a CZK 12,000 fee and the registration in this sense must respect the Czech Commercial Code. Please bear in mind that forms need to be filled at the Commercial Register when incorporating a company. The legal aspects can be entirely explained by our team of lawyers in Czech Republic.

The costs for the Articles of Association

company in Czech Republic is registered as soon as the Articles of Association are provided. These contain complete information about the owners, the activities of the firm, and the rights and liabilities of each member of the company. CZK 2,000 represents the notary costs for the Articles of Association of your firm in Czech Republic. It is good to know that notarized Articles of Association are necessary when opening a bank account for your firm.

Costs for building lease contract

The building lease agreement needs to be certified before running the activities as a brand-new firm. This is subject to a public notary cost of CZK 30 plus 21% VAT. A notarized copy of the premises lease contract is also necessary at the time the company is registered in the Czech Republic.

Businessmen who are interested in receiving further information on the start-up costs in Czech Republic can address our Czech law firm

The threshold for company tax registration 

Businesses operating in the Czech Republic should evaluate whether they meet the criteria for VAT registration. The mandatory VAT registration threshold is set at CZK 2,000,000 in taxable supplies over the preceding 12 months.

If a business surpasses this threshold or anticipates doing so within the next 30 days, it is required to initiate VAT registration. When engaging in transactions within the Czech Republic, adherence to the nation’s prevailing tax laws is essential.

This entails registering with tax authorities to fulfill obligations related to corporate income tax and value-added tax. The submission of a corporate income tax settlement request must occur within fifteen days of the company’s inclusion in the Commercial Register. This obligation applies to all businesses, regardless of their anticipated revenue. In the Czech Republic, you can expect various tax payments, including corporate income tax, value-added tax, road tax, and more. If you have any questions about tax registration costs in Czeck Republic, our attorneys are here to assist you.

Trade license cost in Czeck Republic

In the Czech Republic, one way to establish residence is by conducting self-employed business activities. To do this, you must obtain a trade license certificate known as “živnostenský list.” With this certificate, you will be responsible for tax payments based on a tax declaration (daňové přiznání). The fee for obtaining the certificate varies depending on the type of work, typically CZK 1,000 for ordinary trade licenses. The processing time is approximately 15 days, but it may take longer. If you are an EU citizen, the trade license certificate is valid indefinitely (neurčitá doba), and you can apply for additional certificates as needed.

Notary-related costs in Czech Republic 

Please find below the notary costs that you should consider before registering a business in Czeck Republic:

  • Notarial fee for the preparation of a notarial deed of Contract of Association/Deed of Foundation: CZK 4,000;
  • Notarial fee for the preparation of a notarial deed of confirmation of registration in the public registry: CZK 1,000;
  • Notarial fee for input in the Czech Commercial Register: CZK 300.

If you have any further questions about business start-up costs in Czeck Republiccontact us. Our Czeck lawyers can offer detailed answers to your concerns.

Besides this information, if you are considering buying a property in Czeck Republic, the services of our lawyers are at your disposal.