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
of the parent entity 

Is a party to contracts itself 
Governing law 

Governed by the law of the country
in which the parent entity is located 

Governed by Czech law 
Founders/shareholders 

Can be established by a single entity
only and cannot be established
by a natural person 

Can be established by an unlimited
number of persons/entities 

Contribution during

establishment 

No contribution required 

Obligatory contribution 
(monetary/in kind) 

Ownership 

Ownership of property held by
the parent company (through the branch) 

Ownership of property directly
by the company 

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
Partner
Konečná & Zacha
praha@konecna-zacha.com
www.konecna-zacha.com

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