Setting up a business in the Czech Republic

Entrepreneurship in the Czech Republic is covered by a number of legal regulations. There are several forms of companies, while the most frequent form is a limited liability company, followed by a joint stock company and, finally, a public company.

Legal requirements

First of all, the decision needs to be made whether the business will be in the form of a natural person - entrepreneur, or in the form of a commercial company or a cooperative. For foreign persons, the latter is the typical alternative; a company is established as an entity that is legally separate from its owner.  A public company is the only one that does not have the obligation of creating registered capital. Aside from establishing a new legal entity, one can also do business through an organisational branch established in the territory of the Czech Republic. An organisational branch, however, is not a separate legal entity.

Basic characteristics of a limited liability company [CZ]

Basic characteristics of a joint stock company [CZ]

The most important legal regulation regarding the rights of companies is the Commercial Code.

The Commercial Register is a public list administered by relevant register courts that includes data on entrepreneurs mandated by law. A part of the Commercial Register is a collection of deeds where the company files certain deeds identified by law.

Commercial Register - electronic access

Establishment and foundation of commercial companies is a rather complicated process and, typically, founders entrust such activities to their legal experts. There are also many entrepreneurs who offer to sell companies that were established solely for the purpose of their sale.

Czech Bar Association

Companies online - sale of companies

See the link below for a detailed description of the process of establishing the individual legal forms of commercial companies.

Individual forms of companies

Aside from its smooth establishment and foundation, a company as a business entity must have the right business strategy and secured financing.

Access to finance — Czech Republic

Administrative procedures

Establishment of a company

The establishment of a company is the first phase of creating a company and precedes its foundation. In this phase, registered capital (or at least a part thereof) is also created through deposits from the individual partners.

The process of establishing a company

Getting a business licence

In order to conduct business, a company must obtain a business licence prior to its foundation - either a trade authorisation or another type of business licence. The process and requirements for issuing a trade authorisation (commercial) or a trade licence are stipulated by the Trade Licensing Act. A list of trades and their specific subjects is contained in the Appendices of the Trade Licensing Act.

Trade Licensing Act - text and appendices [CZ]

Any trade office can be used for notification about a business or an application for a trade licence, and as a contact point with the public administration (Czech Point). A trade office is obliged to enter the trade notification into the Trade Registry within five days of receipt of such a notification. An entrepreneur must support the trade authorisation or licence with an excerpt from the Trade Registry that he/she will receive from the Trade Office as confirmation of an entry into the registry. However, companies hold the trade authorisation only as at the date of an entry into the Commercial Register.

Czech Point - contact points for the public administration [CZ]

Trade Register [CZ]

Foundation of a company

Commercial companies and cooperatives originate as of the date of their entry in the Commercial Register. On such a day the established company becomes a legal entity that can acquire rights and obligations.

The process of establishing a company [CZ]

Resources

The following governmental and non-governmental institutions and web portals offer further information and useful services.

Notarial Chamber of the Czech Republic [CZ]

Official portal for business and export

Portal of the public administration of the Czech Republic

Programmes

Programme of subsidies and other support for start-up entrepreneurs.

Support programme for start-up entrepreneurs (START) [CZ]

Personalised help and advice

The Enterprise Europe Network provides businesses with information and advice through its local partners.

Enterprise Europe Network – contact points – Czech Republic

SOLVIT helps businesses deal with problems that arise when national authorities wrongly apply EU market rules.

SOLVIT – contact points – Czech Republic

Source: European Commission