Czech Republic

Operating a business

Setting up a company

Legal business entities

Different types of companies	Number of partners/shareholders	Maximum and/or minimum capital	Liabilities	Registration fees
Private Limited Company	No minimum. Maximum 5.	Minimum CZK 100,000.	Partners' liability is limited to the amount contributed.	5000 CZK fee for trade register
Public Limited Company	No minimum; can be a sole proprietorship.	Minimum CZK 1 million, at least 30% must be released before the constituting general meeting.	Liability is limited to the amount contributed.	5000 CZK fee for trade register
The general partnership	No minimum	No minimum capital.	Liability is unlimited.	5000 CZK fee for trade register
The limited partnership	Two types of partners: active partners and sleeping partners.	No minimum capital.	Liability of active partners is unlimited. Liability of sleeping partners is limited to the amount contributed.	5000 CZK fee for trade register

Business setup procedures

Registration procedure is regulated by the Trading Act the latest changes of which came into effect on January 1st 1996.
All documents must be drawn up in Czech, and translations and signatures must be certified by a notarized deed.
All companies must register with the local Trade License Office where the company is located. The competent Trade Register is the one where the company is located, the district Court or the regional Court. Branches of foreign companies must be registered and provide full details on the activities they intend to develop, under penalty of not being able to carry them out.

A company is founded on the basis of a deed of association, signed by all of the founders. If there is only one founder, the founding document is a founding deed. The founding document of a limited liability company or a joint stock company must be in the form of a notarial deed. A company officially comes into being on the day it is entered in the Commercial Register. A petition for entry in the Register must be filed (with the registration court) within 90 days of the company's formation, or within 90 days of the date on which a trade licence or similar business authorisation is obtained. The following documents are required for registration of a company:
- Founding document;
- An original of the excerpt of the Commercial Register of the founder;
- A document showing legal title for the use of the premises by the company (for instance, proof of ownership of the premises or, in the case of leased premises, consent for the company seat to occupy the premises);
- Trade licences or other relevant licences;
- Documents proving payment of the registered capital (usually bank confirmation);
- A declaration through a sworn affidavit by the company's executive that legal requirements have been met;
- Signature of the company's executive;
- Clear criminal register extract (police statement) of the company's executive;
- Other documents in particular cases.

Signatures on most of the above documents must be notarised.

The competent organization

Ministry of Industry and Trade (in Czech and English)
Database of the Commercial Register (in Czech and English)
Forms of offices, e.g. the Financial Authorities and Trade Licence Offices Trade License Offices – on the web sites of municipal authorities

Working conditions

Legal weekly duration: 40 hours
Retirement age: Men 63 years, Women 59-62 years depending on number of children. In order to reach retirement age it is necessary to pay pension insurance (to be employed or to do own business) for at least 25 years. It is planned to change retirement age for 65 Years.
Working contracts: Legal clauses regulate employment contracts and to a lesser degree collective agreements and individual negotiations.
The terms of employment contracts are extremely rigid and the limits for dismissal are less strict.

Cost of labor

Minimum wage: 8000 CZK (2007), i.e. 300 Euro
Average wage: 21 470 CZK (third quarter 2007), i.e. 800 Euro
Social contributions: Social security contributions paid by employers: 35%
Social security contributions paid by employees: 12.5%

Social partners

Bargaining power: The Czech Republic operates on the principle of free establishment and competition of unions. Establishment of an union is not mandatory in companies. The minimum number of employees needed to establish a company union is three.
The most powerful is Czech-Moravian Confederation of Trade Unions (so called CMKOS). It is an important social partner in tripartite negotiations in the framework of the Council of Economic and Social Agreement of the Czech Republic. It works in the regions of the Czech Republic through Regional Councils of Trade Unions (RROS) and Regional Offices for Legal Assistance (RPP). There are 33 trade unions in the framework of CMKOS.
Unions: CMKOS, Czech-Moravian Confederation of Trade Unions
Other Unions affiliated to CMKOS
Unionization rate: 11% of all employees.
Labor regulation bodies: Ministry of Labor and Social Affairs
Confederation of Industry of the Czech Republic (SPCR)
Czech Council for Safety, Hygiene and Health at Work