Options for registering companies in Czech Republic
As an EU member state centrally located in Europe, the Czech Republic (Czechia) is an attractive jurisdiction for foreign investment. Its corporate framework is governed by the Act on Business Corporations. The standard corporate income tax (CIT) rate is 21%.
Czech Republic offers international companies the following legal structures for establishing a local presence:
Limited liability company (Společnost s ručením omezeným - S.R.O.)
- The Czech S.R.O. is the most common and preferred entity for small and medium-sized enterprises (SMEs) and foreign investors due to its simplicity and flexibility.
- It can be established with a minimum of one shareholder (natural person or legal entity) and requires a symbolic minimum registered capital of CZK 1 (approximately €0.04).
- Shareholders are afforded limited liability up to the amount of their unpaid contribution obligation, as recorded in the Commercial Register.
- The main governing body is the Executive Director (Jednatel), and a Supervisory Board is generally optional.
- The deed of foundation or articles of association must be executed in the form of a notarial deed.
Joint stock company (Akciová společnost - A.S.)
- The Czech A.S. is typically used by large enterprises or companies planning to raise public capital through the issuance of shares.
- It requires a significantly higher minimum registered capital of CZK 2,000,000 (or €80,000 if accounted in Euro).
- The capital is divided into shares, which are generally easily transferable, and shareholders benefit from limited liability.
- A minimum of 30% of the nominal value of subscribed shares must be paid up prior to registration.
- The company can opt for a Dualistic system (Board of Directors and Supervisory Board) or a Monistic system (Statutory Director and Administrative Board).
Branch office of a foreign company (Odštěpný závod or Zahraniční pobočka)
- The branch is an organizational unit and a Permanent Establishment (PE) of the foreign parent company; it lacks separate legal personality.
- It is permitted to carry out commercial activities and generate revenue in Czech Republic.
- The foreign parent company retains full and unlimited liability for all the branch's operations and debts in Czech Republic.
- The branch must appoint a Head of Branch who must be authorised to act on its behalf and must register with the Commercial Register and obtain a Trade License.
- The branch is subject to Czech corporate income tax (21%) on income attributable to its Permanent Establishment in Czech Republic.
To help you choose the right structure, we have created an ‘at a glance’ summary table for the common company types that outlines key differences in formation processes, requirements, and timelines. It serves as a valuable resource for foreign companies looking to setup or expand a business in Czech Republic.
Comparison of the common types of companies in Czech Republic
Information verified against Czech Commercial Register