Registered office address
Every legal entity in the Czech Republic is required to have a registered office address within the country. This requires the consent of a property owner based in the Czech Republic. In the majority of cases, such an address is provided by third-party service providers, as newly registered or ready-made companies do not have their own address. Generally, the address is provided on an annual renewal basis. Without going into too much detail about the consequences of non-payment (separate information is available on our website), it is advisable to renew the registered office address. This is a mandatory expense, and renewal is effected by means of an annual payment.
The typical cost of registered office address renewal ranges from €100 to €250.
If your company’s registered office is situated in its own property, you can skip this expense.
Tax filing and accounting services
This refers to maintaining your company’s accounting records and fulfilling all reporting obligations. This expense item is quite difficult to estimate – the amount of accounting work varies greatly depending on how active your company is. It should be stated clearly that filing reports is a highly specialized field. Therefore, we strongly recommend delegating this work to professional accountants, as attempting to do it independently may result in numerous errors. The cost of an accountant in the Czech Republic is quite reasonable, and this is not something you should try to save money on.
We shall now examine several principal scenarios that we commonly encounter.
Dormant or very low-activity company
This scenario refers to a dormant company that conducts no business activities, undertakes no transactions, or only performs minimal mandatory transactions (for example, renewal of the registered office address and payment to the accountant for the annual filing). In this case, your costs will be limited to the annual filing of dormant financial statements.
The typical cost of such annual dormant accounts is approximately €150-300, depending on the accountant’s pricing.
A reasonably active company, not VAT-registered
This scenario refers to a reasonably active company that receives payments from clients, maintains a bank account, and pays for services and materials used in its work – a company with annual turnover of up to CZK 1 million. This is a relatively common case, and such a company might be represented by, for example, a freelancer. In this case, the reporting obligations similarly consist of filing an annual tax return – though no longer a dormant one – and paying the accountant for it.
The cost depends on the level of activity and the number of transactions, roughly €300-800 per year.
Active company, VAT payer
In the Czech Republic, all companies whose annual turnover exceeds CZK 1 million must register for the value added tax (VAT). This obligation requires the maintenance of VAT accounting records. You can be a monthly VAT filer (returns every month) or a quarterly filer (returns once per quarter). In either case, VAT returns must be submitted for each reporting period – once again, this is performed by an accountant, whose services must be paid for.
The cost also depends on the volume of business activity and the number of VAT transactions to be processed. As a rough guide, we would estimate approximately €100-400 per reporting period (month or quarter).
The annual tax return, which the company is obliged to file, should not be overlooked. For VAT companies, this costs roughly €300-1000 per year, similar to active non-VAT companies.
Again, these are very approximate figures. VAT companies vary widely in activity and transaction volumes, and accounting costs will vary accordingly.
Tax payment
This may be classified as an expense component. Please take into account the two main taxes in the Czech Republic:
- Corporate income tax – 15%
- Value added tax (VAT) – 21%
Which of these taxes are applicable to your situation, what transaction volumes you anticipate, and how the tax is calculated – that is for you to determine.
Other expenses
Additional expenses may arise in some cases, such as:
- Payroll administration – in the event that the company has official employees. A Czech company is generally not required to have employees, and the director does not have to be on a salary. But if you do have employees, you pay your accountant for payroll administration (roughly €20-40 per employee). You also pay social security and health insurance contributions for each employee. These amounts are quite substantial in the Czech Republic – roughly equivalent to one quarter of the employee’s net salary.
- Other expenses that are difficult to list and predict – these are still relatively rare expenses that do not arise very often. For example, if the company has a vehicle on its balance sheet, an annual road tax must be paid. If the company holds certain mandatory licenses, there are often annual costs to maintain them.
Conclusion
Hopefully, this has helped you understand what goes into the costs of running a company in the Czech Republic and how to roughly estimate them. As you can see, there is no single number.