Business corporations are commercial companies and cooperatives. The commercial companies are unlimited partnership (veřejná obchodní společnost – v. o. s.), limited partnership (komanditní společnost – k. s.), limited-liability company (společnost s ručením omezeným – s. r. o.) and joint-stock company (akciová společnost – a. s.). All corporations are registered in a Commercial Register. No corporation can exist without such registration.
First of all, it is essential to choose a type of corporation that is convenient to the business plan or preferences of the founders. It depends especially on requirements of minimum number of founders, minimum registered capital, financial liability of members and internal structure system of a corporation. The most common form of entrepreneurship in the Czech Republic is the limited-liability company.
The fundamental legislation that falls upon business corporations includes:
- Business Corporations Act (Act No. 90/2012 Coll., on Commercial Companies and Cooperatives) available in English, French, German and Russian and in Czech language.
- Civil Code (Act No. 89/2012 Coll.) available in English, French, German and Russian and in Czech language.
- Public Registers Act (Act No. 304/2013 Coll., on public registers of legal and natural persons) available in Czech language.
There are many regulations that apply to business operation in the Czech Republic. You can find the most information on the website of Financial Administration.
Taxes can be divided into direct taxes, related to the level of income of the subject, and indirect taxes, related to consumption, or the purchase of goods and services. The administration and collection of the individual taxes falls under the Ministry of Finance of the Czech Republic and its subordinated tax authorities.
National programme ‘Guarantee’ for small enterprises
The objective of the national programme ‘Guarantee’ is to provide favourable guarantees to small enterprises and thus facilitate their business plans and projects. The programme is open for entrepreneurs from the entire Czech Republic and was prepared in cooperation with Českomoravská záruční a rozvojová banka a.s. [Czech-Moravian Guarantee and Development Bank] (ČMZRB). Enterprises (having less than 50 employees) may obtain a guarantee for a bank loan for investment and operational purposes up to 5 million CZK for up to 6 years.
Programme supporting innovative SMEs – Inostart
The Inostart programme, which has been designed within the framework of the Swiss-Czech cooperation programme focuses on assisting operations of start-ups, which have difficulties in obtaining loans from banks due to their short existence and risks associated with their projects. Enterprises are able to obtain within this programme support in the form of a guarantee as well as subsidy to pay for consulting services relating to their businesses. In March 2014, the government approved an amended version of this programme, which extended its reach to the entire country, made it possible to use the subsidy for consulting services prior to obtaining a bank loan and extended the assistance to mid-sized enterprises.
Operational Programme Enterprise and Innovations for Competitiveness
Operational Programme Enterprise and Innovations for Competitiveness (OPEIC) is currently being finally approved by the European Commission. It contains four material priority axes and one technical assistance axis. Small and mid-sized enterprises again form the main target group of this programme, and these
SMEs will be able to apply for funding in all four priority axes; priority axis 2 is designated exclusively for SMEs:
- Priority Axis 1 “Promoting research and development for innovations,”
- Priority Axis 2 “Promoting enterprise and competitiveness of SMEs,”
- Priority Axis 3 “Efficient use of energy, development of energy infrastructure and renewable energy sources (RES), supporting introduction of new technologies in energy management sector and in secondary raw materials sector,”
- Priority Axis 4 “Development of high-speed (broadband) internet access infrastructure and information and communications technologies,”
- Priority Axis 5 “Technical assistance.”
The scope of CzechInvest activities is aptly described in its full name: The Investment and Business Development Agency CzechInvest. More precisely, CzechInvest is a government agency whose task is to contribute to strengthening the Czech economy competitiveness through support for small and medium-sized enterprises, business infrastructure and innovation, and by attracting foreign investments in the areas of manufacturing, business support services and technology centres.
CzechInvest knows that a sufficient volume of well-equipped business properties is one of the conditions for a successful investment process. The agency has long been committed to the development of business properties. The market of business properties in the Czech Republic consistently offers significant potential in the area of prepared production facilities (generally rental properties), so that a foreign firm can launch production in the shortest possible period of time. This, of course, requires developers to either build production halls on a speculative basis or to at least prepare projects to the stage of construction approval. Business properties include market of industrial properties, industrial zones and brownfields.
The market of industrial properties intended for production displays certain specific characteristics as opposed to properties intended for warehousing and logistics. Recently the demand for production halls intended for rent is growing rapidly and thus exceeds the demand for fully prepared construction plots within industrial zones.
Among the business properties with which CzechInvest is concerned, industrial zones are of key importance. Industrial zones bring quantitative economic benefit in the form of newly created jobs and the effects derived from the amount of investment capital expended by investors entering the zones. CzechInvest has been actively engaged in the area of industrial zones since 1998, when it began implementation of the Industrial Zone Development Programme. In 2006, the new Business Properties and Infrastructure Support Programme was approved, thanks to which support for construction and development of business properties (primarily strategic industrial zones) and regeneration of brownfields is continuing.
There are currently 103 fully prepared industrial zones in which over 600 enterprises have invested. The success of this programme is also evident in the fact that most supported zones are fully occupied by investors. According to periodic statistics on the occupancy of zones supported from the state budget, on average 70% of areas are occupied.
The scope of CzechInvests activities is aptly described in its full name: The Investment and Business Development Agency CzechInvest. More precisely, CzechInvest is a government agency whose task is to contribute to strengthening the Czech economy competitiveness through support for small and medium-sized enterprises, business infrastructure and innovation, and by attracting foreign investments in the areas of manufacturing, business support services and technology centres.
Thanks to the long tradition and great diversity of the Czech industry, the country offers vast sourcing opportunities for your business. If you are looking for a supplier or business partner in the Czech Republic, CzechInvest is prepared to provide you the following services:
- recommendation of suitable suppliers and business partners
- facilitation of establishing contacts with Czech companies and meetings with business partners
- preparation of visits to selected Czech companies
- organisation of business-trip itineraries
- business-trip accompaniment by a CzechInvest project manager
- meetings with potential suppliers in the form of supplier forums
CzechInvest has created a specialized sector databases covering the automotive, aerospace, engineering, electronics&electrical engineering, ICT, subcontracting plastics, subcontracting metal, materials&packaging healthcare and energy industries. The databases are freely available on CzechInvest website www.czechinvest.org.
To support current market trends, CzechInvest launched the CzechLink project to facilitate the qualified investor search and enable the pre-audit project stage. Czech companies actively searching for investors have been provided with assistance in order to prepare information in an internationally understood configuration. The final information is summarized in the company prospect in the structure below:
- Company Story (milestones, highlights)
- Ownership Structure and Legal Form (current owners and legal framework)
- Commercial Profile (customers and customer evaluation)
- Quality Management (received certificates and their validity)
- Technology Profile (equipment and premises)
- Purchasing Profile (suppliers)
- Personal Profile (headcount structure and trends)
- Competition (main local competitors)
- Financial Profile (cost and revenue structure, asset and liabilities structure)
- Financial Ratios (liquidity, rentability, capital structure)