General information

You will find everything you need to know about starting a business in the Czech Republic, including, e.g. division of enterprises by law and information on setting up a new business.

In addition to basic information about providing services, you can find information about possibilities, rights and rules connected to the free movement of services, especially the difference between providing cross-border services and setting up a business. There is also a step-by-step guide on how to proceed when setting up a business.

Are you providing cross-border services or setting up a business in the Czech Republic?

Free movement of services means that an entrepreneur from one EU member state has the right to provide services in the territory of a host member state temporarily and on occasion with an authorization issued in the place of its registered office while the entrepreneur does not need to settle in the host member state.

The period of time for which a company may provide cross-border services without establishing its registered office in the host member state is not defined in detail. A temporarily and freely provided service is a service typically provided for a fee, which is limited with respect to duration, regularity, repetition and continuity and is based on a contract between the service provider and the client, i.e., an entity from another member state to whom the service is provided. Depending on the member state, this period varies from three to six months, or it might not be defined in detail.

Entrepreneurs who want to provide cross-border services need to consult the prescribed procedures in the country and the area where they want to do business for a limited period of time. They need to determine whether the profession is regulated in the given country and whether their qualifications need to be recognized.

Are you posting workers or providing services?

Another important point is whether business entities provide services in person or post their employees to another state; there are differences in applying these two methods.

Certain common principles apply in both cases (providing services in person or posting workers):

In case of temporary post of workers or activities conducted by self-employed persons for up to 183 days within an accounting year, the company pays an income tax in the country in which the company was established.

If the period exceeds 183 days, the company pays the income tax in the host country at the tax office at the location where the order was completed.

The total period of conducting business in the host country should not exceed one year, or two years in exceptional cases. Otherwise, the company must register for social security and health insurance payments in the host country; however, if the business is conducted within the specified time limit, such charges are paid only in the country of origin.

In some cases, and depending on the relevant contract for the avoidance of double taxation, the company might need to establish an organisational unit in the host country.

Establishment of a company

Freedom of establishment allows for establishing a company with the purpose of commercial, industrial or agricultural activity or conducting free enterprise in another EU member state. Freedom of establishment is not limited to intermediary periods, as permanent activity in another member state is assumed. Entrepreneurs from the EU member states have the right to establish a company in another EU member state under the same conditions that apply to domestic entities.

When establishing a company, the host member states can require that all conditions applying to their citizens regarding the establishment of a company are met. On the other hand, providers of temporary services should not be subject to all conditions, except for those necessary and in the public interest.

Points of Single Contact

Points of single contact (PSCs) are aimed at helping entrepreneurs who provide services. The primary role of PSCs is to simplify the process of starting a business in the Czech Republic and the other EU member states. PSCs have two main functions. Firstly, they provide entrepreneurs with as much information as possible, and secondly, they refer them to the appropriate administrative body authorising the respective service.

More information

The following governmental and non-governmental institutions and websites offer further information and valuable tips related to providing services in another member state and export in general.

The Enterprise Europe Network is an extensive network providing information and advice to entrepreneurs through its local partners.

SOLVIT provides entrepreneurs with quick and practical help where they face problems doing business abroad due to incorrect application of EU market rules by public authorities.