6 major challenges companies face when doing business in the Czech Republic

The Czech Republic was recently named one of the easiest countries to do business in, but getting started isn't without its obstacles

Katrina Modrá

Written by Katrina Modrá Published on 09.12.2019 11:09:00 (updated on 11.03.2021) Reading time: 4 minutes

In today’s global economy, entrepreneurs and investors are finding numerous opportunities for doing business abroad. The Czech Republic, long known for attracting top multinational companies and talented workers, was in fact recently named among the world’s best countries for cross-border trade, and one of the easiest nations to do business in.

FOTO MAFRA – Petr Topič

Lukáš Vajda is a partner at SNIEHOTTA & VAJDA LEGAL a Prague-based law firm that specializes in providing comprehensive legal support to medium-sized to large corporations. In recent years his firm has seen an increased demand for legal services from foreign managers, mainly from English- and Spanish-speaking countries.

“Recent reforms have reduced the cost and number of procedures required to launch a company,” Vajda says.

Business handshake in the office

But while he believes that starting a company in the Czech Republic has gotten easier through the years, Vajda says there are still numerous challenges that come with the territory. “The Czech Republic continues to work on reducing bureaucracy and investing in the modernisation of its authorities and processes,” he adds.

Understanding the specifics of the local market, regulations, customers, and culture are still obstacles faced by business owners in the Czech Republic — ones that Vajda’s firm is highly qualified to address.

With clients in sectors ranging from transport, energy and petroleum, manufacturing and services, SNIEHOTTA & VAJDA LEGAL can offer solutions for the particular complexities of not only starting a company in the Czech lands, but also a wide area of services related to maintaining an established one. These services range from corporate, contracts and compliance, to labour law, litigation, and criminal law.

FOTO MAFRA – Petr Topič

Considering starting a business in the Czech Republic? These are the areas in which you can expect to face challenges, says Vajda, whose team of attorneys can also help you choose a suitable form of legal company and mediate compliance with legal requirements when you register your business in Czech Republic.

“Having an understanding of the Czech labour market, tax obligations, and the overall culture and business environment, all mean a significant starting advantage for the client,” says Michal Sniehotta, a partner of SNIEHOTTA & VAJDA LEGAL.

6 major challenges companies face when doing business in Prague and the Czech Republic:

View of Prague's Old Town and Vltava river
View of Prague’s Old Town and Vltava river

Visa difficulties

Though it may have gotten easier to start a company in the Czech Republic in recent years, with the law enabling easier procedures for setting up a company and lowering costs for registered capital, other provisions have become stricter. Namely immigration procedures which have in practice recently tightened as a consequence of the migration crisis, making it more difficult to obtain a longer-term visa for third-country citizens.

Ongoing changes to the tax system

Like immigration law, there are still many obligations that companies must face on a monthly basis with regards to tax compliance, issues that can impede them from focusing exclusively on their business. “It isn’t easy to follow all the applicable rules and their changes without the external help of an attorney or a tax consultant,” says Vajda whose firm is comprised of lawyers as well as tax advisors who have previously gained extensive experience in leading Czech and international law firms and consulting companies.

The language barrier

When dealing with Czech authorities, it is typically necessary to have a translator or a native speaker on hand to assist, as many Czech officials don’t speak English. SNIEHOTTA & VAJDA LEGAL offers help and services in Czech, English, and Spanish. “We understand that communication in their native language is regarded by companies as a high added value,” says Vajda.

Complex bureaucracy

Investors or entrepreneurs will face numerous legal issues when establishing and subsequently launching and developing a business. During this period, it’s important to focus on the business itself, rather than legal issues, advises Vajda. “Many legal questions arise in the course of a company’s life and it’s ineffective for a business to cope with these issues individually,” he says adding that having local help makes things faster, more efficient, and comfortable. SNIEHOTTA & VAJDA LEGAL is familiar with all the necessary law obligations and has experience navigating bureaucratic procedures in the Czech Republic.

Unnecessary expenses

Time is money and anyone who has experienced that endless bureaucracy mentioned above, no matter where in the world they live or what their profession, will agree that hiring someone to do it for you is the more cost effective solution. In order to safely and efficiently do business, says Vajda, “One would have to know all the obligations that are prescribed by law.” He adds that they would also have to know how to face such obligations and address them on a regular basis. In other words, not hiring an attorney becomes the costlier option. “Paperwork takes time away from the entrepreneur and means higher costs and uncertainty,” he says.

Practical problems

Vajda doesn’t see the challenges listed here as insurmountable. “In general, I would not anticipate any sort of fundamental legal objection for foreign companies,” he says. In his experience it’s minor issues that can cause unexpected problems. For example, looking for a work space in Prague can be difficult due to increasingly high rents and demand. SNIEHOTTA & VAJDA LEGAL can provide professional help and assistance with the aforementioned practical problems as well as tailor-made solutions for that wide range of legal issues.

For more information about the legal services offered by the experienced and dedicated SNIEHOTTA & VAJDA LEGAL team, including services in both the English and Spanish languages visit www.svlegal.eu.

This article was written in cooperation with SNIEHOTTA & VAJDA LEGAL. Read more about our partner content policy here.

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