Polish entrepreneurs more and more often decide to go abroad with their business activity, and one of the countries to which they most often direct their steps is the Czech Republic. What tempts them? First of all, the large market potential of our neighbor from across the Olza, as well as favorable regulations and a simple tax system. What exactly are the business conditions there? How to set up a company in the Czech Republic? And finally, what should you pay attention to in order to avoid problematic situations when running a store in the Czech Republic? We check!
Polish element on the Czech market
The Czech Republic is one of the main economic partners of our country. We are connected by cultural and linguistic proximity. It should be emphasized that this country is open to foreign entrepreneurs. There are many Poles among investors who see entering the Czech market as an attractive alternative to services provided in our country. Where does this tendency come from?
There is a general belief that activity in the Czech Republic easier than in Poland. There's a lot of truth in that. The local economy is developing steadily and receives high ratings from rating agencies. In addition, the Czech tax system is simple and offers attractive reliefs.
It is not without significance that the Czech administration is considered friendly - the approach of officials to entrepreneurs is very kind and focused more on helping than controlling. The Czech Republic is among the countries with the smallest bureaucracy.
Cross-border is growing in strength, especially in the field of e-commerce. Nothing unusual. Czech shops are dynamically developing, creating an opportunity to increase sales of Polish products as well. Many of our native entrepreneurs are trying to take advantage of this. What does it all look like in practice?
How much does it cost to run a business in the Czech Republic?
The most common form of business activity of Poles on the other side of the Olza River is sole proprietorship. Our compatriots are less likely to register a company. It should be emphasized that entrepreneurs from outside the Czech Republic can run a company there under the same conditions as citizens of the country. What are the running costs business in the Czech Republic? Is it profitable to run a shop in the Czech Republic?
Taxes in the Czech Republic are not as severe for entrepreneurs as those in Poland. The tax threshold is CZK 1.2 million, which is approximately CZK 240,000 in our currency. zloty). The system of tax reliefs is extensive - you can deduct e.g. amounts related to the use of a pension fund, training, a child or even a professionally inactive spouse. Poles directing their business steps to the Czech Republic also pay attention to the attractive possibility of flat-rate settlement of tax deductible costs up to 60% of its value, taking into account the limit of CZK 1.2 million. In practice, the entrepreneur then pays about PLN 1,000 per month - this amount already includes income tax as well as pension, social and health contributions.
The tax-free amount in the Czech Republic is approx. PLN 40,000 when converted into the Polish currency. zloty. The health insurance contribution is voluntary. In turn, the social security rate depends on the tax base. It is a minimum of PLN 500 and increases with the increase in income. In the Czech Republic, there are two basic rates of personal income tax - 15% and 22%. For companies it is 19%.
Tax issues are regulated by agreements on the avoidance of double taxation concluded between Poland and the Czech Republic. In practice, the tax residence determines the payment.
How to open a company in the Czech Republic? Let's take a look at what the process looks like and what you should keep in mind.
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How to start a company in the Czech Republic - step by step
Assumption companies in the Czech Republic it is an uncomplicated and short way. What is necessary to become an entrepreneur in this country?
• At the beginning, of course, you need to choose the industry and the form of activity (sole proprietorship or as a company).
• The company must have a Czech address. Regardless of this, the entrepreneur can live and work in Poland.
• In order to register, you need the following documents: an identity card, an application for company registration in the Czech Republic, a criminal record certificate, confirmation of the legal title to the premises to which the company address applies and confirmation of payment of the administrative fee (approximately PLN 200).
• Registration takes place in one of the following ways: in person at the office, at a Czech Point or by post. If you have an electronic signature, you can do it by e-mail.
• You must also register with the Tax Office and ZUS and the Regional Social Insurance Institution. All this can be combined in one place - the Central Registration Point.
• There is still the matter of setting up a bank account. For practical reasons, it is best when it is a Czech financial institution.
E-commerce potential. How to set up and run a Czech online store?
It is worth discussing the subject of online sales with our southern neighbors separately. The pace of development of this sphere is impressive - over the last year the turnover of the Czech e-commerce market recorded an increase of 14%!. Online shopping is already used by three-quarters of the country's inhabitants, which is definitely more than the EU average.
Internet establishment store in the Czech Republic therefore it has great business potential. There is only a question: how to trade online on the Czech market? Most visited websites stores in the Czech Republic offer household appliances, clothing and footwear, electronics, home furnishings and sports equipment. It is worth considering one of these areas or go in a completely different direction and shape your business in such a way that czech store fit into a niche.
Undoubtedly before the establishment Czech online store it is worth making a thorough analysis - of the market, the needs of potential recipients and competition. The specific preferences of Czech customers cannot be overlooked either. Here are some important tips:
The main issue is the choice of a platform that will allow you to sell in Czech and crowns. Pay attention to its integration with Czech systems and the geolocation option. In addition, choose the most popular courier companies in the Czech Republic with which you will be able to connect your store.
Get to know the specifics of Czech consumer behavior. You need to know that the citizens of this country prefer cash on delivery rather than bank transfer, although this trend is gradually changing (the pandemic contributed to this, among others). Therefore, the cash on delivery option is a sure thing must haveif you are serious about an online store. It is worth noting that Czechs prefer to shop online via mobile devices.
Czech online shopping platforms are not as popular as those in Poland. Sale on the Czech Aukro (equivalent to Allegro), the largest auction site in the Czech Republic, does not occupy a particularly important place in the country's e-commerce. The Czech equivalent of OLX there is also the avizo.cz portal.
Czechs like to scrupulously compare prices and read reviews before buying. most popular Czech price comparison sites are Heureka.cz, Zbozi.cz and Glami.cz. So it's important that yours Czech online store could be associated with them.
Czech customers appreciate efficient and professional customer service. This increases the credibility of the site and builds trust. The challenge for Polish entrepreneurs is therefore to find a competent, Czech-speaking consultant who will help dispel any distrust of customers towards a foreign store owner. Czechs prefer e-mail contact.
Another important aspect is the issue of the search engine. Those who think that the most popular search engine is Google are wrong. The native Seznam is definitely more often used. When fighting for a high position in search results and increasing website traffic, and thus the company's profits, it is worth considering paid advertising offered by Seznam via Sklik - it is the Czech equivalent of Google Ads.
And finally, the last point. Even the best-thought-out business and the highest-quality offer will not conquer the market without a good advertising strategy and effective marketing activities. It is worth deciding to cooperate with an agency that will select the right tools, tailored to the Czech market, to build the brand and increase its recognition.
Activity and store in the Czech Republic - remember about it!
Running a company abroad is not a road of roses, but everyone knows that. who does business in any country. In addition to numerous benefits, the entrepreneur has to face some challenges.
The language turns out to be a big barrier, and it's not just about contacts with clients, but above all about the current knowledge of the law or official matters. There are many companies in Poland that offer comprehensive assistance in setting up a company in the Czech Republic. They also usually have bilingual specialists who, in case of doubt, will help with accounting or any other difficulties that may arise as you run your business.
It should also be remembered that the Tax Office may carefully examine whether the center of the taxpayer's professional activity is actually located outside the country. If there is a suspicion that the company was founded in the Czech Republic only to avoid paying taxes in Poland, the consequences may be serious. However, when the activity is actually carried out there, there is no cause for concern.
Establishing a company in the Czech Republic is associated with many benefits, but also difficulties. It is therefore worth considering all the pros and cons before making a decision.
Activities in the Czech Republic - what you should know:
What is the best way to start a company in the Czech Republic
Establishing a company in the Czech Republic is a complex process and depends on the scope of the assumed activity. Depending on the type of services or products provided, it will be necessary to register both business activity and enter it in the register of enterprises. The only way to successfully establish a company in the Czech Republic is to carefully study all the procedures and formalities required by law and complete all the necessary documents. This process can be time-consuming, but it is necessary for your company to legally exist and succeed on the Czech market.
What are the benefits of setting up a company in the Czech Republic?
Establishing a company in the Czech Republic has many advantages, including easy access to talented and well-educated employees and a developed infrastructure. It is also the area of operation of many international companies, which allows for establishing beneficial business relationships and increases development opportunities. Additionally, the Czech Republic has one of the lowest income tax rates in Europe, which makes it an attractive destination for entrepreneurs. Moreover, setting up a company in the Czech Republic is much simpler than in many other countries thanks to a streamlined approach to quick company registration.
What are the requirements for setting up a company in the Czech Republic?
Setting up a company in the Czech Republic can be an excellent choice due to the country's pro-business environment. Prospective entrepreneurs must first file an official articles of association with the relevant trade licensing office and register with the commercial register. The company representative(s) must also provide proof of payment for all administrative services provided, as well as a certificate of business identification number issued by the tax administration. Other important requirements include fully establishing payroll obligations as required by the state, purchasing business insurance, and depositing a minimum capitalization if necessary to form a particular type of company, such as a joint-stock company or limited liability company. These steps may seem tedious at times, but once done, setting up and running a successful business in the Czech Republic can be very rewarding.