Excessive bureaucracy is one of the reasons why a growing number of Slovak entrepreneurs are expanding into the Czech market. Let us take a closer look at the main reasons for, and benefits of, doing business in the Czech Republic compared with Slovakia.

Advantages of setting up an s.r.o. in the Czech Republic:

  • Income tax is 19% and VAT is 21%
  • The minimum share capital is CZK 1
  • The minimum shareholder contribution is CZK 1
  • No tax licence burden
  • The tax administrator’s consent is not required for the transfer of an ownership interest
  • Employees working under agreements do not pay social security or health insurance contributions

Is the Czech Market Right for Your Business?

For many entrepreneurs from Slovakia and abroad, the Czech Republic is a logical next step. It offers a larger market, a well-developed industrial base and strong links with Germany and other neighbouring economies. Before you set up a company there, however, it is worth thinking carefully about how the Czech market fits your plans.

Questions to Ask Before You Start

  • Will you sell to Czech customers, or use the company mainly for international trade?
  • Do you need staff, premises or a warehouse in the Czech Republic?
  • Which activities require a trade licence or other authorisation?
  • Will the company need to register for VAT immediately?
  • Where will the company actually be managed from?

Answering these questions early helps you choose the right structure and avoid surprises after registration.

A Familiar Environment

Slovak entrepreneurs often find Czech business culture easy to adapt to. Communication is straightforward, many legal concepts are similar and documents in Slovak are often understood. That said, Czech law has developed independently for many years, and there are differences in company law, taxation and employment rules that must be respected. Treating the Czech Republic as a separate jurisdiction rather than an extension of Slovakia is the safest approach.

Tax Considerations

A Czech company is subject to Czech corporate income tax and, where relevant, VAT and payroll obligations. If you live in Slovakia or another country, your personal tax position and the tax residence of the company also need to be considered, especially if you manage the company from abroad. Double taxation treaties help to allocate taxing rights, but they require careful application. Rates and rules change from time to time, so always check the current figures.

Building a Local Presence

A registered office in Prague or another Czech city, a local bank account and a reliable accountant give your company credibility with Czech partners and help ensure you meet local requirements.

If you are considering doing business in the Czech Republic, contact eTuls. We can help you assess the options, form your company and provide the ongoing support you need to grow there.