The company must register for social security and health insurance within 8 days after the first employee starts work. The whole process can be done online or in person.

A company whose turnover over the last 12 months exceeded CZK 1,000,000 is obliged to register to pay VAT. For obligatory registration, a company in most cases has 15 days following the end of the month when the conditions were met. It also possible to register voluntarily for VAT (at any time), for example if the company has large VAT expenses but has not yet reached CZK 1,000,000 threshold in revenue.

The registration request must be submitted electronically and includes the following information:

• Name and registered office of company
• List of other VAT numbers and registration dates in the European Union
• Bank account in CZK at a Czech bank
• Original excerpt from the Commercial Register
• Description of the nature of the business

All documents must be translated into Czech (legally certified translation is required). The tax authorities have 30 days to process the registration request after submission. The whole process of VAT registration usually takes one to two months, depending on quality of the submitted documents. After registration, the tax office allocates a VAT number (DIČ) to the company, which serves to identify payments from the payer.

In case of distance selling, the threshold determining whether you need to pay VAT for sales to Czech customers is CZK 1,140,000.

Limited-liability companies are obliged to register their beneficial owner in the respective registration court. After submission of the application, the user obtains a unique identifier for the beneficial owner. The registration for legal entities entered in the Commercial Register is subject to an administrative fee of CZK 1,000.

Many investment incentives are offered to both Czech and foreign investors in chosen industries, e.g. technology. These incentives can range from income tax relief (up to 10 years) and real-estate tax exemptions (up to 5 years), to financial support (e.g. for creating new jobs, training new employees, or undertaking strategic investments in manufacturing or technology centres) or transfer of public land at a favourable price.

For entry in the Commercial Register, both branches and companies are obliged to register their business activities with the Trade Licence Office and obtain an excerpt of the trade licence. It is mandatory to appoint a responsible representative (odpovědný zástupce) responsible for the company’s compliance with the conditions of the trade licences (this is not required for business activities covered by the free trade licence).

Czech law recognizes two types of regular employment contracts:

• For a definite period, which can be concluded for a maximum of three years, and there is a limit of three such contracts in a row
• For an indefinite period.

Besides these types of contracts there are two additional agreements:

• Agreement to complete a job (Dohoda o provedení práce), which cannot exceed 300 hours in one calendar year
• Agreement to perform work (Dohoda o pracovní činnosti), which cannot exceed a maximum of one half of established weekly working hours (20 hours)

Real estate can be acquired in two ways:

• Directly, i.e. by acquiring the property (asset deal)
• Indirectly, i.e. by acquiring a corporation owning real estate (share deal).

Czech government has abolished the real estate acquisition tax in response to COVID-19. Previously, the rate amounted to 4% of either the purchase price or the value of the real estate as determined by an official assessment, whichever was higher.  VAT may also be applied to certain types of transactions. Besides this, there are additional fees, which include:

• Fee for entry in the Cadastral Registry (CZK 2,000)
• Fees for authentication of signatures, paid to the notary or authority (CZK 30 per signature)
• If applicable, an escrow fee (the amount depends on the value of the transaction).

In the case of a share deal, REAT is not applied and the costs of the transaction depend on various factors related to the type and the size of the company, the value of its assets, etc. Other costs may include legal and notarial expenses and registration fees, if needed. The seller’s income from sale of the shares may be subject to:

• Corporate income tax (19%) if the seller is a legal entity
• Corporate income tax (5%) if the seller is a licensed real estate investment fund
• Personal income tax (15%) if the seller is a natural person.

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