Expanding into Europe? The Czech Republic offers a strategic, low-cost base for establishing your export-import business through an s.r.o. (spoleฤnost s ruฤenรญm omezenรฝm) โ the Czech version of a limited liability company. Hereโs what you need to know.
Why Choose the Czech Republic?
Located in the heart of Europe, the Czech Republic is a landlocked EU member with strong road, rail, and air links to Germany, Austria, Poland, Slovakia, and beyond. Its open economy, skilled workforce, and favorable tax regime make it ideal for trading companies.
Legal and Tax Regime
A Czech s.r.o. is easy and affordable to set up.
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Minimum share capital: CZK 1 per shareholder (approx. โฌ0.04).
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100% foreign ownership is allowed.
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Corporate income tax: 21%.
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Dividend tax: 15% (may be reduced or exempt under EU Directives or tax treaties).
Incorporation typically takes 2โ3 weeks, and the company must have a registered office in the Czech Republic. No resident director is required.
Czech VAT Regime for Trading Companies
Once your companyโs turnover exceeds CZK 2 million (~โฌ80,000) annually, VAT registration is mandatory. Voluntary VAT registration is possible earlier โ which is often advantageous for export-import businesses.
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Standard VAT: 21%.
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Intra-EU exports: 0% VAT (reverse charge mechanism).
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Imports: VAT can be deducted if the buyer is VAT-registered.
The Czech VAT system is fully harmonized with EU rules, which facilitates cross-border B2B transactions.
Common Export-Import Activities
Many investors use Czech s.r.o. structures to import goods from Asia or the US, warehouse them in central Europe, and then distribute across the EU.
Typical goods include:
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Consumer electronics
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Industrial components
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Fashion and textiles
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Packaging materials
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Food and beverages
Case Study: German-Chinese Trading Venture
A German entrepreneur partnered with a Chinese supplier to import LED lighting into Europe. They formed a Czech s.r.o., registered for VAT, and rented warehouse space in Prague. Goods are imported from Shenzhen to Prague via Hamburg and then delivered to B2B clients across Germany, Austria, and Poland. Thanks to the 0% intra-EU VAT rate and input VAT recovery, their Czech s.r.o. minimizes tax friction while benefiting from EU single market access.
If you’re looking to build a cost-effective trading hub in Europe, registering a Czech s.r.o. gives you legal certainty, favorable taxation, and VAT benefits. Itโs an ideal solution for exporters and importers targeting the EU.
Need assistance setting up your Czech company or VAT registration? Please contact your Damalion expert here to help.