Doing business in Czechia as a foreigner: what to arrange before you start

Doing business in Czechia is open to foreigners and, in principle, uncomplicated — provided you settle a few basics in advance. Most delays do not arise at the company formation itself, but from unresolved questions around residence, the seat or documents.

So before you start, go through the four points that decide on a smooth start. The choice of business form, in particular, often determines how demanding the remaining steps will be.

Do you need a residence permit?

This is the key question right at the start. To set up an s.r.o. no residence permit is needed — a foreign person can be a shareholder and managing director without residence, even from outside the EU. A trade licence is stricter: citizens of the EU and EEA obtain it under the same conditions as Czechs, whereas an entrepreneur from a third country usually needs a residence permit. Residence status therefore often predetermines the choice of business form.

An EU or EEA citizen thus enters Czech business on practically the same terms as a Czech. An entrepreneur from a third country must first arrange a residence permit for a trade licence, while the route via an s.r.o. is open even without one — which is why it is more accessible for many foreigners.

Which form of business to choose

You can do business as a sole trader (OSVČ), or through an s.r.o. A trade licence is cheaper and simpler, but you are liable with all your assets; an s.r.o. limits liability and looks more credible, at the cost of more administration and double taxation of profit. A comparison is offered in the article sole trader or limited company. For a foreigner without residence, an s.r.o. tends to be more accessible.

Where your registered seat will be

Every company needs a registered seat entered in the commercial register. You can use your own or leased premises, or a virtual office — an official address without physical presence. To register it you need the property owner's consent; the documents are covered in the article documents to register a company seat, and the options in virtual office address in Czechia.

How you will prove good standing

A company's managing director and a sole trader must prove good standing with an extract from the criminal records register, usually no older than three months. For a foreigner, an extract from the home country is required; depending on the country an official translation and higher authentication — an apostille or superlegalisation — may be needed. For EU citizens the process is simpler than for third countries.

Conclusion

Before founding a company, settle residence, the form of business, the seat and good standing — with these four things arranged, the setup itself is usually a matter of a few days. The specific procedure for an s.r.o. founded by a foreigner is covered in the article setting up a Czech s.r.o. as a foreigner.

Frequently asked questions