Czech s.r.o. (LLC)
Formation of a Limited Liability Company (s.r.o.) in the Czech Republic
A Czech s.r.o. is an affordable solution for establishing a small or medium-sized business in the heart of the European Union. Its key features include limited liability of shareholders, low registered capital, and simplified corporate and administrative requirements.
FACTS & INFO
Legal forms of companies are regulated primarily by the Czech Commercial Code. Under Czech law it is possible to set up six different forms of business companies, i.e. a general partnership, limited partnership, limited liability company, joint-stock company, European Company, and European Economic Interest Grouping. The establishment of companies in the Czech Republic is governed by the Civil Code (Act No. 89/2012) and the Act on Business Corporations (Act No. 90/2012).
A limited liability company (s.r.o.) is the most popular legal form of corporation in the Czech Republic.
The name of the company must be in Latin characters and must end with "s.r.o." to denote limited liability.
ARTICLES OF ASSOCIATION
It is necessary to adopt articles of association when founding an s.r.o. The company becomes a legal entity when it is formally entered in the commercial register. According to the Czech Commercial Code, the articles of association must contain the corporate name, the registered address of the company, the activities in which the company will engage in, the amount of share capital and the share interest of each shareholder.
The number of shareholders in a company may be from one to 50. A shareholder can be a physical or legal person of any nationality. Details of shareholders such as their name, address and nationality, are part of the public record. However, they may avail themselves of a nominee service by appointing a nominee shareholder, which we can provide by virtue of an agreement or a deed of trust for a reasonable fee.
The registered capital of a company is composed of the contributions made by the shareholders. As of January 2014, the minimum contribution of each shareholder to the registered capital is CZK1; however, it is recommended to set up an s.r.o with a minimum of CZK1,000.
A limited liability company does not issue shares. The ownership interest represents the shareholder’s participation in the company and the rights and duties derived from such participation. The size of the ownership interest is basically determined by the ratio of a particular shareholder’s investment contribution to the company’s registered capital.
DIRECTORS AND COMPANY SECRETARY
A limited liability company does not have a board of directors. Its executive body is made up of one or more executive directors. The law does not restrict their number; but their number must be stipulated in the founder’s deed or the memorandum of association. The executive director is appointed by the general meeting (the supreme body of the company) or by the sole shareholder exercising the powers of the general meeting. Each executive director represents the company independently, unless the founder’s deed or the memorandum of association stipulate otherwise. The founder’s deed or the memorandum of association may stipulate that the executive directors form a collective body which will make the legal position of executive directors closer to that of the board of directors in a joint-stock company. A director does not have to visit the Czech Republic in order to complete the process of company registration.
There is no requirement for a company secretary.
Czech companies must have their registered office in the Czech Republic.
Company meetings need not be held in the Czech Republic.
The incorporation of a new company takes from between one to two weeks.
RECURRING MAINTENANCE FEES
As from the second year, there are recurring maintenance fees of $1,900. These include:
- Provision of registered office.
All companies registered in the Czech Republic are liable to pay corporate income tax. It is payable on worldwide taxable income and capital gains. The tax base is calculated from the accounting profit/loss shown on the relevant financial statements, prepared according to Czech accounting legislation. The corporate income tax rate is 19%. A corporate income tax rate of 5% applies to investment funds, unit funds and pension funds. Czech legislation allows taxpayers to change their accounting period from calendar year to fiscal year (and vice versa) by simply notifying the tax authority.
AUDIT AND ACCOUNTING
Legal regulations regarding accounting and audit in the Czech Republic are in compliance with the legislation of the European Community. All accounting records must be in the Czech language. Companies registered with the commercial register are obliged to use double entry bookkeeping. Single-entry accounting will be no longer used. The Act No. 563/1991 Coll., on Accounting, as amended (the “Accounting Act”), requires that consolidated financial statements must be prepared for an accounting unit that is a managing or controlling entity.
There is no obligation to file an annual return and to pay annual government fees. However, it is necessary to prepare financial statements and file a corporate income tax return every year, within three months after the end of the accounting year. As the accounting year usually corresponds to the calendar year, the deadline for filing the CIT and paying the income tax (19%) is March 31st.
Our Services and Requirements
OUR SERVICES INCLUDE:
- Name check and approval
- Drafting of articles of association
- Notary public and stamp duties fee
- Submission of company documents to the trade register
- Provision of a standard set of original corporate documents
- Provision of registered office for one year
- Rubber stamp
Please provide the following documents for all directors, shareholders, beneficial owners, and authorised signatories:
- Notarized copy of valid passport.
- Original or Certified copy of utility bill / bank statement (as verification of residential address, dated within three months).
- Original or certified copy of Banker’s reference letter (dated within three months).
- In cases where shareholders and/or directors are corporate bodies, full apostilled set of corporate documents and certificate of good standing (for companies registered more than one year).
IMPORTANT NOTE: LICENSABLE BUSINESS ACTIVITIES
If you conduct any activity without the required license or authorisation granted by a relevant authority in any jurisdiction, Starting Business will not be able to assist you with the company formation or bank account opening related to such unlicensed activity.
Licensable activities include, but are not limited to: provision of financial services involving trading/brokerage in foreign exchange, financial and commodity-based derivative instruments and other securities; offering investment advice to public; insurance and banking; operation and administration of collective investment schemes and mutual funds; payment processing services; money exchange, money transmission or money brokering; asset management; safe custody services; gaming, gambling and lotteries.
Please contact us if you need assistance in the licensing of your financial, Forex brokerage or gambling company.
Shipping of corporate documents or banking kits to your destination requires an extra charge and will be automatically added to your order during checkout. Shipping costs for international courier services are set automatically depending on geographic zones.