Setting up a business

There are two ways you can carry out commercial activities on your own in the Czech Republic.

The first is by obtaining a trade licence. This enables you to work independently, in your own name. It is particularly appropriate if you have some kind of service to offer – typical examples in the case of expats include teaching (especially language teaching), other activities in the educational sector (for example examining) and translating and interpreting. But the areas covered by a trade licence are very wide, including the manufacture and sale of various products, services in the health industry and lots of other activities.

The second means of making a living here is to set up a limited liability company. As a rule this is the route taken when it is a question of larger-scale undertakings, usually involving either other partners or employees or both.

Trade licences

Until fairly recently, obtaining a trade licence (živnostenský list) was complicated by the fact that it was necessary to take out an individual licence for each area in which you planned to work. Now, however, most of these have been grouped as unlicensed trades (volná živnost), with one licence covering all areas. Only where certain trades require technical qualifications is it still necessary to apply for individual trade licences for each trade.

Acquiring a trade licence certificate is a reasonably straightforward, though somewhat drawn out, process. Here in Brno the Živnostenský úřad, which issues the trade licences, is located at Malinovského nám. 3. The documents required are pretty much like those that are needed for obtaining other official papers in this country, including a clean criminal record from your home country. You will also have to show some proof that you can use the address you give as being that of your business. For example, if you plan to use the flat you rent as your seat of business, you will need a signed statement from your landlord that you can use your home address for business purposes.

It is important to remember that all documents not in Czech must be officially translated into Czech and notarized and the must not be older than 90 days.

At the Živnostenský úřad one of the employees will check your documents to make sure you have everything needed, and then fill in the application form on-line with you. The cost is 1,000 CZK. You will receive a “certificate of incorporation” document.

When receiving your trade licence, you will have to go through two more important steps. The first is to receive your DIČ, or Tax ID Number, from the tax office (Finanční uřad – there are five in Brno; which is yours depends on where you live). This you have to have before you start doing business (it must appear on all your invoices, for example). And you also have to register at the social security office (Městská správa sociálního zabezpečení, at Veveří 7)  to arrange for monthly social insurance payments. Here they will assign you yet another number [!] and give you instructions on how to pay the required fees. Amounts are set by law, including a minimum amount, which you will probably be asked to pay in the first year or your business activities. This will then be adjusted, depending on your income. Finaly, if you are taking part in the public health insurance (not the commercial one paid in advance) you have to inform them too.

And of course, when the new year comes around, you will have to pay taxes. The fiscal year in the Czech Republic matches the calendar year; tax returns must be filed by 31 March, unless they are prepared professionally, in which case a later submission date is possible.

Limited liability companies

The name for a limited liability company in Czech is společnost s ručenim omezeným; they are familiarly abbreviated to s.r.o.s.

The great advantage of doing business within the framework of a limited liability company is that your personal assets will be protected in case someone files a lawsuit against your company. However, setting up a company of this type is not something that can be done without expert help, nor can it be done on a shoestring – the minimum starting capital is 200,000 CZK.

It is best to turn to firms that can offer professional advice on the ins and outs of setting up a firm of this kind. There are many firms in Brno that specialize in this area; some are specifically geared to working with foreigners. Much information can be found, in English, on-line.

For more details, including a list of required documents needed for a trade license and step by step guidelines, download the infosheet on setting up a business. We also have an infosheet describing obligations towards various offices when setting up and running a business. If you don’t find what you’re looking for there, send us an inquiry.

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