As the capital of the Czech Republic, the City of Prague has long stood as an important gateway to Europe, connecting East and West through historical, political and cultural bonds. The strength of its economy owes a lot to the continuing high levels of foreign direct investment that flows into the country and this is testament to the growing importance of Prague as a central business location in Europe as a whole.
The Czech Republic is a stable economy with a dynamic business environment. As part of the EU, it provides future investors with access to the markets of other European countries. Prague is easily connected to many other places in the world and is within a two-hour flight of most European cities.
There are many high-quality universities in Prague ensuring a sufficient number of young educated people. Students are usually well-equipped in English. Those from technical fields are among the best in the world and they are also being a demand in foreign markets. In the past decade, Prague has become a friendly startup environment, supporting their development. There are also many companies supporting startups in Prague in the form of accelerators, incubators or coworking spaces.
According to fDi Intelligence, Prague ranks tenth among major European cities in terms of their attractiveness to foreign direct investment. It has one of the lowest tax rates in Europe. Moreover, the costs of qualified workforce and living expenditures are much lower than in the rest of Western Europe.
The Czech Republic is ranked as one of the countries with the highest quality of life according to many international rankings. It is also one of the safest countries in the world. According to the Expat Insider index, the Czech Republic was considered the 4th best country regarding family life in 2019 and one of the greenest capitals in the world. Both for you and your business partners and employees, the city offers a perfect environment for a work-life balance.
“We found out about the Expat Centre through their event on professional networking. It is nice to know there is a place in Prague that focuses on the expat wellbeing and spreading relevant information.”
“I follow the Expat Centre's social media to make sure I do not miss interesting Prague events in English. I like the mix of business/start-up events and various cultural events tips in their newsletter.”
Once you’ve made the choice to come to Prague to start a business you have already made the first and perhaps most crucial step forward. Now you need to pick the company type that suits you best. The two most common types are the limited liability company (s.r.o.) and the joint-stock company (a.s.), but you can also establish a limited partnership (k.s.) or a general commercial partnership (v.o.s.). Additional types include branch offices, which aren’t Czech legal entities but extensions of foreign companies, foundations (a non-profit organisation), cooperative (co-op) businesses and self- employment (OSVČ) for individuals.
Make sure to secure sources of financing for your business. You can research business loans, angel investors, venture capitalists, crowdfunding, startup incubator, government grants and subsidies and so on.
There are many companies in Prague that are able to facilitate your business. If you need to find premises, employees or mentors, check out the other sections where you can find useful links.
The actual process of setting up a company may vary depending on the type of business. Most business types follow the same basic structure. First, your company (limited liability company, joint-stock company, general commercial partnership and foundations — if there is only one founder, others are exempt) must be established by a notarial deed executed by a Czech notary. Next, the company needs to acquire a trade licence and a new bank account before it is registered in the Commercial Register, which usually constitutes the official establishment of the new company. Finally, If you are not an EU citizen, you have to make sure all your visa requirements are met. All beneficial owners must be registered in the Czech register of beneficial owners.
Self-employed persons enjoy the benefits of being their own boss. The Civil Code defines self-employment as follows: “A person who, on their own account and responsibility, independently carries out a gainful activity in the form of a trade or in a similar manner with the intention to do so consistently for profit.” This includes artistic or other creative activities on the basis of copyright relationships. All activities are carried out in the name of the self-employed person and they are fully liable for them. This type of entrepreneur enjoys relatively easy tax recording thanks to a simple flat rate. They are exempt from separately paying income tax, social security and health insurance premiums through a single lump-sum payment. This however only applies to those who made less than CZK 1 million in the previous year. If this amount is surpassed, the self-employed have to keep regular accounting books. The payments are usually a little more than CZK 5,000 per month. A self-employed person may conduct business as a primary or a secondary activity. This influences the payment of health insurance and social security contributions.
Before the company is registered in the Commercial Register a special bank account has to be opened, where the founders deposit their monetary contributions. The bank will not allow access to the money deposited in this bank account before the registration of the company in the Commercial Register unless the money is to be used for the payment of establishment-related costs.
The whole process of registration may take several months depending on the Registration Court (the local Regional Court). The proposal for registration has to be issued by all members of the executive board. The registration form can be downloaded here (the website is unfortunately only available in the Czech language).
For citizens of countries outside of the EU or the EU's associated countries (Norway, Liechtenstein, Iceland and Switzerland) and with the exception of those granted asylum, staying in the Czech Republic for the purpose of doing business (self-employed in the Czech Republic; a statutory body or a member of a statutory body of a company or cooperative) requires a Long-stay visa for the purpose of business (also known as a Business visa). An appointment at the Czech Embassy of your country has to be made and an interview with the applicant is conducted while submitting the application. The written record of the interview is a part of the application.
The registration of the company’s beneficial owner is done either by the competent registry court or by the notary. Records of beneficial owners are not public. It is used by authorities when checking the owners’ legal obligations (law enforcement bodies, the Financial Analytical Authority, etc.). All changes to the company's list of beneficiaries must be reported to the Czech register of beneficial owners without undue delay.
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