How to start a business in the Czech Republic

Planning to start a business in the Czech Republic? It’s easy to see why, as the country offers all kinds of attractive benefits for both startups and established businesses. This includes easy access to trading in the EU, a vibrant economy and supportive business environment.

But how easy is starting a business in the Czech Republic as a foreigner? Find out everything you need to know below, as we’ve put together a helpful guide covering trade licences, business types, company registration and much more.

We’ll also show you a smart way to manage your company’s finances in Europe, using Wise Business - the ideal solution for international businesses.

💡Learn more about Wise Business

So, let’s dive right in with a look at what it’s like doing business in the Czech Republic.

Doing business in Czech Republic

Being located in the geographical centre of Europe, the Czech Republic is an extremely attractive place to do business. It offers access to EU markets, has lower labour costs than other EU members and boasts a skilled workforce. The country also treats foreign and domestic companies the same under its legal system.¹

The Czech Republic has an export-driven economy, with most goods going to EU member states, 26% exported to Germany as it's main trading partner, as well as the US with 23% of total exports.²

The industries which contribute most to its economy include:²

• Manufacturing
• Construction
• Agriculture
• Automotive industries.

As for the business culture in the Czech Republic, it’s pretty similar to the UK. For example, the working week and business hours are virtually the same. This is another reason the Czech Republic business environment is attractive for UK entrepreneurs.³

Czech Republic business registry

One of the most crucial things you’ll need to do to set up your new business is to register it with the Czech Republic business registry. This is called the Commercial Register. You’ll also need to apply for a trade licence from Czech Republic authorities.

But first, you’ll need to decide on a legal structure for your new Czech company. There are quite a number of different business entities to choose from, including:

• Limited Liability Company (S.R.O)
• Limited Partnership (KS)
• General Partnership (VOS)
• Joint Stock Company (AS)
• Cooperative (Družstvo)
• Sole proprietorship
• Branch office
• Representative office.

We’ll run through all of these business types below in a little more detail.

Limited Liability Company (S.R.O)⁴

SROs are the most common company type established in the Czech Republic. Like in many countries, partners in an SRO are liable for the company’s obligations only up to the capital they originally contributed to the company. There must be at least one shareholder and one director.

Limited Partnership (KS)⁴

A KS is a company in which all partners are liable for the company’s obligation up to the amount of their contributions as disclosed in the Commercial Register, paid or unpaid.

General Partnership (VOS)⁴

In a VOS, two or more people own, control and run the business under a single trade name. They split profit and expenses equally, and every member is entirely responsible for the financial commitments, debts and responsibilities of the company.

Joint Stock Company (AS)⁴

This structure of business, which is often used by larger companies, is where the shareholders own stock in the company and have restricted responsibility.

Shares can be freely traded without registration in the Czech Republic’s Commercial Register, which makes it attractive if you plan to make your company publicly traded. A Joint Stock Company must have a minimum capital stock of 2 million CZK.

To establish an AS in the Czech Republic, it is also necessary to draw up a founding contract, including the company’s statutes, and an issue of shares.

Cooperative (Družstvo)⁴

A cooperative may conduct business for the benefit of its members, the number of whom does not need to be specified. A cooperative is liable for all of its assets.

Sole proprietorship⁴

A sole proprietorship is one of the simplest business structures in the Czech Republic, as it’s for businesses owned and managed by just one person. It’s just like a sole tradership in the UK. The business owner runs the company on a self-employed basis, and is solely accountable for all financial debts as well as taxes.

Branch Office⁴

A branch office isn’t technically a Czech business. It is simply just a representative of your foreign business in the Czech Republic. Under the law, it isn’t regarded as a separate organisation though, so the parent firm must authorise all decisions. The parent firm is also responsible for all activities, duties and financial obligations.

Representative Office⁴

Similar to a branch office, a representative office can be set up to represent an international business in the Czech Republic. However, it is restricted to market research or advertising the parent company’s products or services. It can’t carry out any other activities.

How to start a business in Czech Republic - Step-by-step

To make it a little easier to get your new venture off the ground, here’s a step-by-step look at the process of setting up a business in Czech Republic:⁵

1. Obtain police records for any current or future managing directors.
2. Have the revenue authority confirm documents that state none of the business’s partners have outstanding tax obligations.
3. Get authenticated statutory declarations and specimen signatures for all current and future managing directors.
4. Establish an office for the company’s operations, as well as ownership documents if purchasing property.
5. Produce partnership articles, which must be signed and verified by the commissioner.
6. Set up a business bank account for the initial deposit of capital.
7. Register at the Trade Licensing Office and apply for your trading licence
8. After your company is established, apply for a Commercial Register registration within 90 days.

Registration with the Czech Republic business registry will require the following documents:⁵

• Two copies of the partnership agreement, signed by the commissioner
• Confirmation of deposits
• Bank confirmation of the ability to make deposits
• Authorised copies of trade licences
• Lease or documents establishing ownership of office property
• Statutory declarations of managing directors
• Police records of managing directors
• Legal stamp (valued at 5,000 CZK)
• Register at the Social Security Administration, and select a health insurance company within 8 days of registration
• Finally, register at the Revenue Authority within 30 days of company establishment.

Setting up a business in Czech Republic - FAQs

If you’re new to the Czech Republic or this is your very first business, you’re bound to have questions about setting up your new company. We’ll address some of these below, including likely costs and how to get help and support.

How much does it cost to start a business in the Czech Republic?

The two main fees you’ll need to pay are for your trade licence, and to register your company in the Commercial Register.

Trade licence applications cost 1,000 CZK per licence.⁶

To register your new business, the fee is 6,000 CZK for first-time registrations. If you use a notary to carry out your registration in the Commercial Register, the fee ranges from 2,700 CZK to 8,000 CZK.⁷

Check below the current conversion rate between GBP and CZK.

Wise Business account is a handy tool for UK business expanding abroad. Once you set up your business in the Czech Republic you can easily convert British Pounds to Czech Koruna to hold money on Czech currency or set payments like a local. All conversion is done based on the mid-market exchange rate with low and transparent fees.

Get started with Wise Business 🚀

Is it easy to start a business in the Czech Republic?

You should find it relatively straightforward to start a business in the Czech Republic. It’s an entrepreneurial country, and the government offers support and the relevant forms and documents to help you get set up. It could take as little as a few weeks to get your new business officially registered.⁸

Another useful source of help and support is CzechInvest.

Is the Czech Republic startup friendly?

The Czech Republic has a thriving startup landscape, especially in the capital city of Prague. It’s benefitted from a great deal of foreign investment, which has made it one of the biggest startup ecosystems in Central and Eastern Europe.⁹

Entrepreneurs and startups are supported by the Investment and Business Development Agency CzechInvest.

How to start a business in the Czech Republic as a foreigner?

To take advantage of Czech Republic business opportunities and launch your own company, you’re likely to need a long-term residency visa. You can find lots of useful information about visas from the Ministry of the Interior of the Czech Republic.

If you’ll be a company director, you’ll also need to be able to prove you have no outstanding tax obligations and good police records.

Manage your Czech company's finances with Wise Business

A Czech bank account could be useful for managing your new company’s finances, but it isn’t the only solution out there. In fact, there are alternatives that could be more convenient and cost-effective.

Open a Wise Business account and you can manage your company’s finances in 40+ currencies. You’ll be able to pay suppliers and staff in euros and British pounds, as well as receiving payments in multiple currencies.

You can even automate payments using the powerful Wise API to save even more time. See how it works here in our case study

There are even Wise cards to cover business expenses, letting you and your team spend like locals in 150+ countries across the EU and beyond.

Wise payments are fast and secure (even for large amounts). Best of all, you’ll only pay low, transparent fees and always get the mid-market exchange rate.

This is the rate that banks use to buy and sell currency, and is widely considered the fairest rate you can get. When banks carry out currency conversions on behalf of customers, they usually add a mark-up or margin to the exchange rate. This makes it more expensive for your business, as less of your money reaches your recipient.

It’s quick and easy to open a Wise Business account, with a fully digital application, verification and on-boarding process. Check out the requirements here.

Get started with Wise Business 🚀

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And there you have it - a helpful guide on how to start a business in the Czech Republic. We’ve covered all the essentials, from getting a trade licence and registering your business to the legal structures you can choose from. Good luck with your new European venture!

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Sources used for this article:

1. Legal 500 - Doing Business In: Czech Republic
2. US International Trade Administration - Czech Republic - Country Commercial Guide
3. Thomson Reuters Practical Law - Doing Business in the Czech Republic: Overview
4. OnDemand International - 8 Types of Companies in the Czech Republic: Benefits Mentioned
5. Embassy of the Czech Republic in London - Setting Up a Business
6. Move to Prague - Czech Trade Licence - Everything you want to know
7. BusinessInfo.cz - Start your business
8. Faster Capital - Starting a business in Czech Republic
9. Netguru - How Foreign Investments Made Prague a Strong Startup Hub

Sources checked on 22-Jan-2024.