How quickly can an abandoned company be automatically liquidated in the Czech Republic?

This refers to how quickly and when Czech state authorities will independently begin liquidation procedures for a legal entity that has been abandoned and not maintained for a long time.

Indeed, abandoned Czech companies that fail to fulfill their legal obligations sooner or later should enter into so-called “forced” liquidation, where state authorities initiate the dissolution process without any involvement from the founders.

But when exactly does this happen? This is a complete mystery and a true lottery. Despite reviewing many cases, we cannot determine what factors influence when this procedure begins.

We can broadly divide these cases into two categories:  

• Older companies (registered around 2013-2014 or earlier) typically remain in the registers with no indication that forced liquidation might begin. We have dealt with numerous clients with such companies, and we additionally checked with the Czech tax authorities and the Trade Register to determine their status and whether forced liquidation might begin. In the vast majority of cases, we found no information indicating that dissolution was likely to begin any time soon. These older companies remain in the registers without raising any red flags.
• Newer companies (registered after 2013-2014) are far more likely to face forced liquidation. We have come across such cases more frequently, typically triggered by failure to submit required reports. That said, it’s still not a certainty that every newer legal entity will automatically face this procedure, but we have definitely observed it happening more often with this group.

Even when Czech authorities do initiate forced liquidation, the process moves slowly. No one is in a hurry to implement it, and based on cases we have observed, one can typically expect a timeframe of 2 to 4 years.

Is there any way to speed up the liquidation process?

Unfortunately, there is no way to accelerate the start of this procedure. When Czech state authorities will decide to begin it is a mystery.

Essentially, the only way to speed up the process is for founders to initiate a formal company closure procedure. We have detailed information on the options and timelines for liquidating a Czech company – feel free to check it out if you are interested.

Based on our experience, forced liquidation can be triggered if:

• A company fails to submit tax returns for more than three consecutive reporting periods (more than three years)
• The registered office address has been cancelled and the address provider officially notifies Czech authorities of this cancellation

But again, neither of these conditions guarantees that liquidation will actually begin. We frequently come across companies that have not submitted tax returns for over a decade and yet remain in the registers. Likewise, address providers often neglect to notify Czech authorities when an address has been cancelled.