Written by Richard Gürlich
of GÜRLICH, ODROBINA & spol.
Do you want to start a business in the country you live in but feel it is too much hassle? Is your business doing so well that you would like to expand your activities abroad? We can‘t make these decisions for you but we can provide you with relevant information to help you make the right decision and also implement it.
In general, foreigners i.e. individuals or legal entities who are registered outside the territory of the Czech Republic, can engage in business activities under the same terms and conditions as Czechs, .i.e. individuals or legal entities who are established within the territory of the Czech Republic.
Czech law recognises different forms of business vehicles that you can choose from, in spite of the fact that there may be certain restrictions. The laws have been somewhat relaxed for certain nationalities compared to others, or starting out as a sole proprietor can be less of an administrative burden compared to starting out as a company. But it is up to you.
We set out below the different ways of engaging in business activities:
1. Business activities of legal entities
Foreign legal entities may engage in business activities in the territory of the Czech Republic by establishing an enterprise or a branch located in the territory of the Czech Republic, and then they can apply to be recorded in the Commercial Register. Once registered, you can carry on business activities according to the range of activities as recorded in the Commercial Register. In the application to the commercial court, you must also include trade licenses or concessions appropriate to the trading activities. The company must also designate a ‘responsible official´ i.e. the person representing the company who is responsible to ensure compliance with the Trade Licensing Act.
2. Business activities of individuals
Foreign individuals who want to engage in business activities in the Czech Republic have to obtain a residence permit for a period exceeding 90 days and also a working permit issued by the employment bureau, but this does not apply to foreign individuals whose business activity is based on a trade license or who have already obtained a permanent residence permit. As for the registration in the Company Register, there is an exemption for foreign individuals having a residential address in one of the member states of the European Union or in another state of European Economic Area. The requirement to appoint a responsible representative need only be satisfied if the individual himself does not fulfil the conditions set by the Trades Licensing Act.
3. Participation in business activities of other persons
Foreigners, both legal entities and individuals, can establish a Czech legal entity or become a partner or member in an already existing Czech legal entity for the purposes of engaging in business activities. Such a person may also become the sole founder or sole owner of a Czech legal entity under certain conditions. Such an entity can only be established under Czech law.
4. Transfer of legal entity´s seat
The final possibility on how to engage in business activities under the Commercial Code is to transfer an existing company´s registered office address from abroad to the Czech Republic. In such a case, it is necessary to record this change in the Companies Register so that the change is made valid, but the legal capacity and the internal regulations of the company are still governed by the law under which the company was established, with some exceptions.
5. Protection of investment
In conclusion, we would like to help you ensure that your investment in the Czech Republic is safe. Nobody can give you any guarantee that your business will be successful and that there won´t be periods during which you will have to give more than you will get back. However we will be here for you to ensure that you comply with the provisions of the Commercial Code, and other regulations that can safeguard your assets such as bilateral agreements on investment promotion and protection.
As mentioned at the beginning of this article, our aim is to provide you with basic information for you to further consider and that´s why this article may not have answered all of your questions. In such a case, please do not hesitate to contact us, as we would be only too pleased to hear from you. It will be a pleasure for us to help you in any way we can.