Company incorporation in the Czech Republic for shipping purposes
30 October, 2023
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One of the popular forms of doing business in the Czech Republic is incorporation of a local company. The most common form of company in the Czech Republic for this purpose is a limited liability company (společnost s ručením omezeným). All the registration procedure in respect of a new company generally takes about 8-10 weeks (including opening bank account).
According to Czech law, a company shall have a bank account if its authorized capital exceeds 20,000 CZK. However, practice shows that bank account is usually required for any company.
The company shall keep accounting records in Czech language and in Czech currency. In such case, financial statements will require an annual audit only if the company meets at least two of the following criteria for two consecutive reporting years:
- The cost of its net assets exceeds 40 million CZK (ca. 1.6 million EUR);
- The company’s income exceeds 80 million CZK (ca. 3.2 million EUR); and
- The number of employees exceeds 50 people.
In all other cases, an audit of the financial statements is not mandatory.
Under Czech law, the company’s income shall be taxable with corporate income tax at a rate of 19%. However, since 2024 such tax rate will be increased to 21%. Basic VAT rate in the Czech Republic makes up 21%.
When dividends are paid, the latter shall be taxable at source at a basic rate of 15%. However, for non-residents of the Czech Republic, the tax may be reduced due to bilateral agreements in international taxation.
In the Czech Republic, shipping activities are subject to licensing and are covered by a general free trade license. In order to obtain such a license, it is only necessary to notify the trade licensing authority after the company registration in commercial register. If the company plans to carry out related activities, a general license may cover such related activities (for example, cargo handling).
Interlegal provides legal advice and legal support for clients upon incorporation of companies in many foreign jurisdictions, opening bank accounts and payment systems, as well as assists in obtaining permits for the newly incorporated company to conduct its business activities.
