
Establish your business
There are multiple ways to establish a business in the Czech Republic. Here is what you should know before you decide which way you want to go.
Suitable investment vehicle
When starting a business in the Czech Republic, one must decide in what form the business should be established. There are essentially two basic ways of starting a business – setting up a branch office of a foreign entity or establishing a company under the laws of the Czech Republic. It is important to mention that foreign entities have the same rights to conduct business in the Czech Republic as domestic ones. The key differences between branches and newly established entities are shown in the table below.
Branch office of a foreign entity | Czech legal entity (company) | |
Legal capacity | No legal capacity by itself | Full legal capacity |
Contracts |
Enters into contracts on behalf |
Is a party to contracts itself |
Governing law |
Governed by the law of the country |
Governed by Czech law |
Founders/shareholders |
Can be established by a single entity |
Can be established by an unlimited |
Contribution during establishment |
No contribution required |
Obligatory contribution |
Ownership |
Ownership of property held by |
Ownership of property directly |
Legal entities
Most investors choose to establish a Czech legal entity. The two most popular forms are limited liability company (LLC) and joint-stock company (JSC). The main differences between the two are:
- The obligatory minimum amount of registered capital, which is CZK 1 (approx. EUR 0,04) per shareholder in a LLC and CZK 2,000,000 or EUR 80,000 in total for a JSC.
- Corporate governance is more complex in the case of a JSC.
- Transfer of shares in a JSC can be simpler than transfer of ownership interests in a LLC.
- The shareholders of a LLC are liable for the company’s debts up to the amount of their unpaid contributions, whereas the shareholders of a JSC are not liable at all.
Overall, the JSC form is usually recommended for bigger businesses with multiple investors, where small numbers of shares are transferred more frequently. LLC is the most frequent starting point of most entrepreneurs, as it is cheaper and easier to establish.
Representing the branch office/company
A branch office is represented by its appointed branch manager. On the other hand, representation of a company can be modified in various ways. Members of the statutory body can act either independently or collectively (two or more together) in some or all instances, or some of them may be allowed to act independently and some of them collectively. There can also be only a single member of the statutory body. It is up to the shareholders how they modify the company’s representation within the boundaries of the law.
Time and costs of establishment
The timeline varies in different situations, but it usually takes 1-2 weeks after the initial decision to establish and register a branch office/company in the Czech Republic (hereinafter collectively referred to as the "Entity"). First of all, the articles of association are adopted – this has to be carried out in the form of a notarial deed in case of a company. After that, a couple of initial steps must be taken, such as opening a bank account in the Czech Republic, transferring contributions to the registered capital (in case of a company), registering a trade licence etc. Once all necessary steps have been completed, the Entity can be registered in the Commercial Register and can officially start conducting business. Company can be registered in the Commercial Register by a notary directly or by filing a registration motion with a registration court. The estimated costs of establishment are shown in the table below.
Branch office | LLC | JSC | |
Estimated local fees (excluding legal, tax and other advisory services) |
No less than EUR 300 | No less than EUR 470 |
No less than EUR 1,100 + registered capital of EUR 80,000 (minimum) |
Radka Konečná |