Czech Republic Company Formation

Open company in:

  • [en]
  • [ro]
  • [fr]
  • [es]
  • [it]

Czech Republic

Company Formation and Related Services

Newsletter

News

Buying a European shelf company with VAT number

Whenever you need to start doing business immediately in a European country and you need a company with a VAT number, you don’t have to wait for the bureaucratic procedures.

read more

Partner Law Firms

We encourage you to contact our partner law firms in Bucharest: Rolegal and E&C, both part of our legal network.

read more

Tax Minimization Structures

BridgeWest is specialized in special corporate structures designed for tax minimization. No matter where you want to incorporate your company, you will need to consider how you can legally minimize costs.

read more

Paying Taxes in The Czech Republic

August 17, 2011, 4:52 pm
BridgeWest

1. What is the corporate tax in the Czech Republic?

A Czech company has to pay a corporate income tax rate of 19%, with a rate of 5% for pension funds, investment funds and share funds. The corporate tax has to be paid for the worldwide income.

 

2. What is the VAT in the Czech Republic?

The standard VAT rate in the Czech Republic is 20%. However, there are still services and good which are subject to a 14% VAT rate, such as certain books and magazines, food supplies and non-alcoholic beverages, pharmaceutical, sporting activities, recreational activities and some leisure activities. The VAT registration is mandatory for the entities with taxable supplies above 1 million CZK (for more than a year), or if the intra-community purchase exceeds 326000 CZK (along 12 months).

 

3. How can the VAT be refunded in the Czech Republic?

The entities that may enroll for VAT refund must be non-resident companies, not registered for VAT which doesn’t provide taxable supplies in the Czech Republic. In order to obtain a VAT refund in the Czech Republic, you must submit an application in Czech, along with a list with the invoices through the tax portal of the residence country no later than September 30th of the calendar year following the refund period. This procedure is available for EU members.

The non-EU members must submit an application, the VAT certificate from the country of origin, the invoices in original and a declaration that the applicant is respecting the requirements necessary to ask for a VAT refund to the Financial Office for Prague.

 

4. What is the dividend tax in the Czech Republic?

Dividend distributions between Czech companies are exempt from tax only if the parent company maintains a holding of at least 10% of the distributing company for one year. This is the directive of the parent-company treaties. Dividends paid to nonresidents are subject to a 15% withholding tax, unless there is a reduction in a tax treaty.


5. What are the taxes rates applied on other payments?

The interest and royalties are taxed with 15 % but the member of EU or EEA may ask for a refund at the end of the year. The technical service fees are in generally taxed with 15% but exemptions are granted.

No branch remittance tax is required in the Czech Republic.


6. Are there any incentives for foreign investors in Czech Republic?

The Czech Republic is one of the most attractive states in the Eastern Europe for foreign investors. Incentives including tax relief are governed by the Investment Incentives Act. Corporate tax exemptions for a period of five years are provided for new investments. There are also offered grants per employee and for training, which can reach a maximum of 50,000CZK (2000 EUR).

More than 77 double tax treaties were signed so far by the Czech Republic, which grants special taxation of the profits and dividends, interests and royalties.


7. Why do I need a local accountant for my local business in the Czech Republic?

It is advisable to hire a local accountant in order to be dealing with accounting issues in a faster way, especially if you have an experienced person, who has worked in the Czech tax system before and know very well the accounting legislation. 




Open Business in Czech Republic
We guarantee a cost-efficient solution for full company setup, bank account and VAT registration
Company Formation in Czech Republic

Prague

BridgeWest offers company incorporation services in the Czech Republic. Our services include:

- drawing up the articles of association that can be signed through power of attorney (Czech laws require powers of attorney for any public ... [More]

Lawyers in Czech Republic

Prague

BridgeWest provides a wide range of legal services in Czech through our affiliated Czech lawyers and Law Firms in Prague and other major cities in Czech. We are mainly specialized in the main aspects of Czech Commercial Law, including Company Form ... [More]

Czech Accounting Firm

Prague

BridgeWest provides accounting services in Czech through our affiliates in Czech main cities. Our main areas of expertise include the following:

Accountancy & Book keeping in Czech Republic
-    Maintaining yo ... [More]