Company Formations in Czechia - Interesting facts and general conditions
Czechia is located in Central Europe and became an EU member in 2004. Since then, the tax framework has been altered from a flat tax to a progressive tax system. However, the CIT tax rate (Corporate Income Tax) is currently 21% (19% until 2024), with a Withholding Tax (WHT) of 15% for dividends for both residents and non-residents (EU/EFTA/DTA), whereas interest and royalties are tax-free. However, Dividends, Royalties, and Interest paid to related EU-resident companies are not subject to WHT if certain conditions are met.
In cases where no Double Taxation Agreement (DTA) is in place, a Withholding Tax (WHT) of 35% applies, as is the case in Switzerland. Therefore, we strongly recommend consulting with our experienced Lawyers and tax advisors at TAXEDO LLP for an in-depth consultation before forming a company in the Czech Republic.
Additionally, there is a special tax regime for entrepreneurs with a tax of just 15% minus deductibles. This tax regime will result in an effective tax rate ranging from 6% to 9% in some cases. However, this tax regime is capped at a maximum income level. Hence, there are favorable conditions for company formations in the Czech Republic.
The labor market is good, and the workforce is affordable.
Furthermore, one can enjoy reasonable living costs and low housing costs if living in a hot spot is not required. Hence, numerous international companies are already doing business in and from Czechia. Increasingly, firms and entrepreneurs are becoming aware of the benefits of company formations in Czechia and establishing subsidiaries and branches within the country.
The banking sector is stable, with a good selection of local and international banks, so banking is not a concern.
Our experienced and highly qualified international tax and legal advisors will review your company structure, existing management, and mandate contracts. We also offer a review of your contractual arrangements at home and abroad. Additionally, our tax and accounting department will be pleased to handle your bookkeeping and tax returns.
Why not work with us? We offer company formations in Czechia from € 1,280.00 net, all-inclusive. Enjoy our fast, reliable, and competent approach in your native language (German, English, French, Italian, Spanish, Czech, Slovak, and Greek).
Ideal Tax Framework for Transport Companies and Entrepreneurs
Before joining the European Union, Czechia introduced a modern tax framework. However, until now, there has been no regime for group taxation in place. Czech legislation currently fulfills all relevant EU standards, EU regulations, OECD standards, FATF standards, and FSF standards.
Czech companies are recognized throughout the European Union as EU companies with an extensive Network of Tax Treaties. This circumstance is used mainly by holding companies. Czechia nowadays has one of the most favorable Tax Regimes in Central Europe and competes within the EU with Slovakia and Poland, but with a smaller price tag.
Why not speak to us about the advantages of company formations in Czechia for a transport and logistics structure or other business sectors?
What you need to consider if relocating to Czechia
A long-term stay in a country for more than 183 days will usually (and automatically lead to an unlimited tax liability for your worldwide income. Some countries go even further and already assign this tax liability if you can permanently use your apartment (this can even be the room in your parents’ house or a regularly visited hotel), which you can access with your keys – known as “Schlüsselgewalt” in German-speaking countries. This rule establishes or maintains an unlimited Tax liability for your worldwide income. If this subject interests you, you may learn more about it on our dedicated website for Taxation.
A tax residency in Czechia is granted to non-domiciliaries if they stay in the country for at least 183 days each calendar year. This fact limits your ability to engage in extended travel.
Especially for Digital Nomads, Czechia is a fantastic place to stay, creating a safe environment within the EU and short distances to the continent. But leaving all doors open for up to six months of travel. One can’t stay in any other (EU-) country for more than 183 days, as this would trigger a tax residency there. There are some exceptions we will discuss in a meeting.
Setting up a company in the Czech Republic is a straightforward process. The real challenge lies in establishing an unassailable tax residence for both the company and its founder. Relocation may sound simple, but it is by no means as easy as moving to a new country. German-speaking countries in particular are familiar with the taxation of hidden reserves and exit taxation.
Once you have overcome these problem areas, the next hurdle awaits you: opening a bank account. You probably cannot imagine how many founders in Cyprus, Malta, and Ireland are stuck with a useless company without a bank account. Please don’t listen to rumors; instead, contact us directly. We will tell you straight up whether it can work for you or not. That’s a promise.
If you have plans for company formations in Czechia, be sure to speak with us first to avoid costly mistakes. We can help you determine if a relocation is a good fit. Our Tax Experts and corporate finance experts at TAXEDO LLP will find a sophisticated solution.
TOP Jurisdiction for EU Residence in Central-Europe
Czechia, however, offers ideal conditions for a tax residence. To obtain a tax residence, one must stay more than 183 days in Czechia. With close links to other European countries, good flight connections, and travel times of roughly two hours into the center of Europe, this is an ideal place to conduct business of any kind.
Of course, you cannot stay in any other country for more than 183 days, which would trigger an unlimited tax liability there. This concept is, therefore, ideal for everyone who can live and work flexibly (e.g., digital nomads).
You can rely on well-founded and legally sound advice if you come to us. Together, we will find your ideal life concept.
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