Company Formation Czech Republic

/Company Formation Czech Republic
Company Formation Czech Republic2018-07-31T09:57:34+00:00

Company Types Czech Republic

a.s. – akciova spolecnost – is legally and tax wise equivalent to limited company, inc. or corp.

Limited Liability – the owners of the a.s. are shareholders. The shareholders are not liable for the debts and liabilities of the a.s. The a.s. issues shares and the shareholders and the number of shares determines the percentage of votes when electing or removing directors.

Directors – a.s. is managed by one or more directors, who can be entitled to bind the company each independently or jointly two or more together.

Taxation – the profits or loss are filed on the tax return of the a.s. and taxed with income tax rate. If the a.s. generates profit any residual profit after tax can be paid out to the shareholders as dividend and is tax with dividend tax rate.

s.r.o.spolecnost s rucenim omezenym – is the most popular company type in the Czech Republic. s.r.o. has same legal and tax status as a.s., therefore, it is close to ltd., inc. or corp.

Advantages: s.r.o. is cheaper to incorporate and cheaper to maintain then a.s.

Disadvantage: s.r.o. does not issue shares but membership interest, which is more difficult to transfer than shares because each transfer must be registered with companies house.

k.s. – komanditna spolecnost is legally and tax wise equivalent of limited partnership – LP.

Limited Liability –  the k.s. has two types of members. One type of member is limited partner called komanditista and its personal assets are insulated from any debts, liabilities or bankruptcy of the company. The other type of partner is general partner called komplementar and its assets are available to satisfy debts and liabilities of the k.s. The k.s. can have several limited or general partners and they can agree the size of the partnership interest they each hold, which in turn determines the size of the profits and loss or voting percentage they each hold. The unlimited liability of the general partners can be eliminated by inserting a limited company as intermediary partnership holder before the ultimate owner.

Directors – the k.s. is managed by general partners, who have the rights and duties equivalent to directors.

Taxation – the profits or loss of the k.s. are split between the limited and general partners according to the percentage of partnership interest. Then the part of profits or loss assigned to the limited partners is filled on the tax return of the k.s. and taxed with corporate income tax rates. The part of profits or loss assigned to the general partners is passed on to the general partners and filled on tax returns of general partners and taxed according to the tax rates of general partners. The general partners can be other legal entities.

v.o.s.verejni obchodni spolecnost – is legally and tax wise equivalent of general partnership – G.P.

Limited Liability – the partners of the v.o.s. are liable for the debts and liabilities of the partnership. The liability of the general partners can be eliminated by placing a limited company as intermediary partner between the v.o.s. and ultimate owner.

Directors – the general partners manage the v.o.s. and have equivalent rights and duties as directors.

Taxation – profits or loss are passed onto the general partners and filled on tax returns of general partners and taxed according to the tax rates of general partners. The general partners can be other legal entities.

Foundation – the foundation must create an initial endowment in an amount of at least £190,000 into a bank within a period of about 7 days after formation (amount is later released and money can be used).

Foundation fund – the advantage compared to the foundation is that there is no obligation to pay in an initial endowment (190 thousand for the foundation). If you would be the only founder, you must drawn up notarial deed (for this reason, it is recommended to have more founders).

NGO – is just simple non for profit organization – spolek (občanské združení).

Price for the establishment (including legal fees and VAT):

  • foundation – £1,500
  • foundation fond – £1,300
  • NGO – £600

For the formation of NGO or foundation is necessary the following:
– 3 board members
– 1 auditor
– 1 founder (ideally 2)
– the purpose of the foundation
– name
– registered office

Additional services
– Tax Registration £200

Tax Rates Czech Republic

Corporate income tax rate: 19%
Individual income tax rate: 19%
VAT tax rate: 21%

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Form and Fees

Company Formation Czech Republic