Foreigners and business

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Foreigners doing business

Business activities of foreign individuals from the EU and associated states

The EU associated states are Norway, Liechtenstein, Iceland and Switzerland. Foreigners from these countries can establish a business under the same conditions as Czech individuals. The following general conditions governing the operation of a trade should be met: minimum age of 18 years, legal capacity and unimpeachable character (absence of a criminal record).

There are several types of trades in the Czech Republic: unqualified trade, professional trade, vocational trade and licensed trade.

A trade is declared at a Trades Licensing Office on the territory of the Czech Republic. A trade declaration with the following data is to be submitted:

  • First name, surname and possibly trade name, if already registered in the Commercial Register
  • Citizenship
  • Personal identification number, if any
  • Date of birthday
  • Residence outside the Czech Republic
  • Line of business, mentioning fields of activity
  • Place of business (municipality, its part, street, land registry number and house number, if any, postcode)
  • Registration number, if any
  • Fixed establishment or establishments where the operation of the trade will be started immediately after a trade licence/permit is issued, excluding mobile establishments and automates.

If a foreign person wishes to carry on other than an unqualified trade, also a confirmation of professional qualification is to be submitted.

Business activities of foreigners from outside the EU

A foreigner who is not from the EU and associated states and wishes to start carrying on business in the Czech Republic must have a residence permit to stay in the Czech Republic. The foreigner who received asylum in the Czech Republic does not need the residence permit and can carry on business as a Czech individual. Other conditions of obtaining a trade licence/permit are the same as for foreigners from the European Union.

Business activity of legal persons

The second most often type of business activity after the entrepreneurship of individuals (or traders) is business activity of legal persons. A legal person carries on business in the form of companies.

Types of companies:

  • Limited liability company
  • Joint stock company
  • Public company
  • Limited partnership
  • Co-operative

If a company is established by one foreign person as a sole founder, articles of association or memorandum of association are replaced by a deed of foundation, which must contain the same elements as the mentioned documents. Articles of association and the deed of foundation must be executed in the form of a notarial record. A foreign person as a founder may empower its agent or attorney to establish a company based on a special power of attorney. Companies are established in two stages. The first stage is foundation of the company, and the second stage is its incorporation on the date of its registration in the Commercial Register. Foundation of the company by itself does not mean its legal existence.

Residence permit

To start conducting business in the Czech Republic, a foreign person is to meet not only requirements specified in the Trades Licensing Act and the Commercial Code but also requirements of alien law specified primarily in Act No. 326/1999 on the Residence of Aliens in the Territory of the Czech Republic, which regulates the issuance of visas and permanent and temporary residence permits. This act guarantees, inter alia, the issuance of permanent residence permits to EU citizens and their family members who conduct business in the Czech Republic or are members of the statutory body of a legal.

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