Business in the Czech Republic for Foreigners

What is “business in the Czech Republic”?

In compliance with Czech legislation, a business is any ongoing activity that an entrepreneur engages in on their initiative, in their name, and under their authority to make a profit.

In the Czech Republic, running a business often has the form of:

• a business of individuals or OSVČ (Osoba samostatně výdělečně činná)

It means that a person on their initiative and responsibility freely conducts a profitable activity in the form of a trade or in a similar way.

OSVČ (Osoba samostatně výdělečně činná) is a person who engages in a business endeavor (a self-employed person). Self-employment can exist as a primary or auxiliary activity. You can engage in self-employment as a secondary activity if you’re still working, on maternity and paternity leave, or getting a retirement benefit.

In the Czech Republic, trading is a regular type of commercial activity. Nevertheless, it is conceivable to do business while working in a so-called liberal profession. It is required to join a professional chamber for some liberal occupations (such as law and medicine), but just optional for others (journalists).

• a business of a juridical person

There are a lot of types of corporations for establishment. Among the most popular is LLC (SRO in the Czech) or joint-stock company (AS).

But it is significant that for all corporations and cooperatives enrollment in the Obchodní rejstřík (register for firms) is required. No business may be legally recognized without it. Thus, it is important to distinguish between creating a corporation, which is the first stage and maintaining a legal presence, which comes next.

What does “outgoing activity” mean?

If an action occurs regularly, it is seen as ongoing. For instance, an episodic activity that gives you a profit, but was conducted one time, does not qualify as company revenue. Even if the activity only occurs a few times a year, it counts as a business if you intend to continue with it.

What does “on your initiative” mean?

It means that businessmen are independent. You as an entrepreneur organize your work and take care of the expenditures associated with running your business on your own if you choose your hours of work and the location of your company.

Moreover, you should look out for unfair labor methods, notably the Švarc systém.

The Švarc systém is a sort of economic scheme in which people who work for an entrepreneur regularly in a dependent relationship pose as independent business owners (usually self-employed).

Requirements for Foreigners to do a business

• The same rules that apply to the Czechs apply to other EU citizens, other signatories to the “European Economic Area” agreement, as well as Swiss Confederation citizens.
• If you are from a non-EU nation, you must have a more complicated process of getting permission. Firstly, you ought to submit an application for a lengthy business visa at the embassy of your nation. You will be begged to demonstrate that you have the wealth required for a lengthy visa stay. If you fulfill the requirements you can essentially run a business in Czech as a resident.

What do you have to obtain a long-stay visa?

• A bank account report for a bank or other financial entity account held in the name of the foreign citizen confirming that he or she is permitted to utilize the funds in the necessary amount while on Czech Republic territory. It had to be abundantly evident in the supplied documentation that the foreign citizen is qualified to use the money in the Czech Republic.
• Additional document about economic stability proves that the inhabitant from the other country has the necessary economic resources available to him or her, or that he or she has obtained funds to pay the expenses related to his or her presence in the country.

A legitimate, globally accepted credit card that is not prohibited from usage in the Czech Republic. The non-resident is obligated to concurrently present a declaration from a bank account held in a bank or another financial institution, demonstrating that he or she is authorized to spend the funds in the stated amount during his or her presence in the country, upon request from an official authority.

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