The Czech Republic’s economy is driven primarily by exports to the EU, particularly Germany, and increased foreign and domestic investment. The country’s main imports are machinery, industrial goods, semi-finished products, chemicals and natural resources (mainly fossil fuels). The main exports are cars, semi-finished products, electronic products and chemicals.
Limited Liability Company (SRO):
- Minimum share capital is €7,000, at least 50% paid up
- Each shareholder to contribute minimum €700
- An individual may be a sole shareholder in no more than three SROs
- Minimum one director required of any nationality
- A reserve fund from the profits should be built up to 10% of the registered capital
- Submission of annual financial statements is required only if
- Balance sheet exceeds €1.4 million
- Net turnover exceeds €2.8 million
- Number of employees exceeds 50
Joint Stock Company (AS):
- Minimum share capital is €70,000, 30% must be paid up
- management and supervisory board is required
- Reserve fund from the profits to be built up to 20% of the registered capital
- Submission of annual financial statements is required only if
- Balance sheet exceeds €1.4 million
- Net turnover exceeds €2.8 million
- Number of employees exceeds 50
The Societas Europaea (SE) company form also is available. The SE is designed to enable companies to operate across the EU with a single legal structure, to facilitate mergers and to create flexibility for companies that want to move their head office from one EU state to another. Companies from two or more EU member states are permitted to merge to form an SE or create an SE holding company or branch. A company may convert an existing entity to SE status without liquidating.
Taxation:
- Corporate income tax is 19% (5% for some types of funds, etc.)
- Capital gains are generally included in other taxable income and taxed at the regular corporate income tax of 19%
- Standard VAT rate is 21%, reduced rates at 15%, 10%, 0%
- Losses can be carried forward for 5 years
- Withholding tax on Dividends is 15%, however dividends paid by Czech companies to parent companies located in other EU, Iceland, Norway and Switzerland are exempt from withholding tax if the parent company maintains a holding of at least 10% of the distributing company for a period of at least 12 months
- Dividend distributions between two Czech companies are exempt from tax
- Dividends paid to a jurisdiction that has not concluded an agreement for the exchange of information on tax issues with the Czech Republic are taxed at 35%
- Withholding tax on Interest paid to a nonresident is 15%
- Withholding tax on Interest paid to jurisdiction that has not concluded an agreement for the exchange of information on tax issues with the Czech Republic is 35%
- Withholding tax on Royalties paid to a nonresident is 15%
- Royalties paid to a jurisdiction that has not concluded a tax treaty or an agreement for the exchange of information on tax issues with the Czech Republic are taxed at 35%