Firm Profile > Kocián Šolc Balaštík > Prague, Czech Republic
Kocián Šolc Balaštík Offices
Kocián Šolc Balaštík > The Legal 500 Rankings
Kocián Šolc Balaštík's 'synchronised and consistent team' has a proven track record of handling first-of-their-kind corporate and M&A transactions, including privatisations and spin-offs, among others. The practice is jointly led by managing partner Dagmar Dubecká, Petr Kasík and Martin Šolc. Areas of sector expertise for the group include real estate and banking. Also notable is that technology industry matters are handled by Drahomír Tomašuk. Associate Ján Béreš is also recommended.
Dagmar Dubecká; Petr Kasík; Martin Šolc
Other key lawyers:
‘The team is synchronized and on the same page, everyone I dealt with is up-to-date with what’s going on and I feel I am getting a consistent customer experience from the team.’
Corinthia Palace Hotel Company Limited
J&T Finance Group SE
Vivesa holding s.r.o.
Dispute resolution Tier 1
Highlighted for its 'personal and pragmatic approach', Kocián Šolc Balaštík is strong in handling banking litigation for local and foreign clients. Pavel Dejl is experienced in large arbitration cases and securing arbitral victories for domestic clients in international courts. He co-heads the practice with Sylvie Sobolová, who handles international investment disputes and is the key name for high-stakes litigation (often against sovereign states). Energy and construction remain core strengths for the team.
Pavel Dejl; Sylvie Sobolová
‘strong experience in court proceedings and leading disputes, pre-dispute negotiations skills, ability to explain and summarise the nature of the issue’
‘excellent communication skills, strong in giving arguments’
‘high level of knowledge and skills, experience, reliability’
‘The team is well-respected and serious about the work it does. ’
‘Pavel Dejl is clever and canny in achieving his clients’ goals. Sylvie Sobolova is a forceful personality. ’
‘Very personal approach, confidence in a strong team. A pragmatic approach with a projection of great and proven experience. Always willing to meet the needs of the client, but always only safely. Very comprehensive service in the legal and economic sense.’
LEO Express, a.s.
O2 Czech Republic a.s.
Energo – Pro a.s.
Czech radio broadcaster
Sberbank CZ, a.s.
Czech national bank
UniCredit Bank Czech Republic and Slovakia, a.s.
PPF Group N.V.
ŠKODA AUTO, a.s.
Tax Tier 1
Kocián Šolc Balaštík is active across the full range of tax planning services, particularly those with a cross-border angle and is frequently active in large transactional mandates. Practice head Helena Navrátilová is the key name focusing on complex tax advisory for multinational corporations and banking clients. Co-head Jan Černohouz specialises in corporate tax matters and restructuring. The group also has a reputable tax litigation offering.
Helena Navrátilová; Jan Černohouz
‘Knowledgeable, quick response.’
Rockaway Capital SE
REMA Systém a.s..
Ball Aerosol Packaging CZ
Česká televize (Czech television)
IHI Towers s.r.o.
YIT Stavo s.r.o.
Mattoni 1879, a.s.
O2 Czech Republic, a.s.
Quanta Human Resources CZ s.r.o.
Rockaway e-commerce, a.s.
Česká spořitelna, a.s.
IMMORENT PTC, s.r.o.
O2 Czech Republic a.s.
Avast Software s.r.o.
EU and competition Tier 2
Kocián Šolc Balaštík has an excellent reputation in the competition space and acts for large multinational clients in merger control proceedings. The team has considerable experience appearing before the Czech Competition Authority and the European Commission on litigation and other antitrust matters. The practice has a strong dispute resolution offering, with co-chair Sylvie Sobolová being noted for her arbitration expertise. She co-heads the group with Pavel Dejl. Associate Martin Vráb is strong in administrative proceedings. The team counts leading players in the automotive sector as clients.
Projects and energy Tier 2
Kocián Šolc Balaštík has an excellent reputation for its capabilities in handling large-scale power projects in the Czech Republic's domestic energy market. Practice head Václav Rovenský is noted for his expertise in advising foreign investors and private entities on a broad range of high-value project financings and transactional work. At associate level, Tomáš Sequens handles commercial transactions with an environmental and energy-based focus. Construction projects also feature in the workload.
Other key lawyers:
‘Ability to co-operate, both within the team and with the client, and a high ability to understand the needs of the client.‘
‘Tomáš Sequens has a sense of detail and high expertise in each area of law, great communication, and the ability to explain a discussed topic.‘
Green Gas DPB
Energy Ústí nad Labem
Teplárna České Budějovice
Kocián Šolc Balaštík is strong in domestic and cross-border banking and capital markets transactions, as well as regulatory work. The team handles financial regulatory issues for clients operating in the banking sector, including those providing technology-based services. Martin Krejčí jointly leads the team with Petr Kasík (who handles capital markets transactions) and Vlastimil Pihera. Other core areas of strength include bond issuances and licensing work.
Martin Krejčí; Petr Kasík; Vlastimil Pihera
‘Very flexible and quick responding. Great business thinking’
‘Passionate, clear willingness to help and understand the business’
‘Dr. Pihera is excellent in the theoretical aspect but also exceptional with his professional connections within the industry and interpersonal skills.’
J&T Loan Fund
Immorent (Erste group)
ING Bank Śląski (ING group)
The Governor and Company of the Bank of Ireland
Gorenjska banka d.d., Kranj
Boels Topholding B.V.
Mattoni 1893 (formerly Karlovarské minerální vody)
Lidl Czech Republic (Czech subsidiary of the German global discount supermarket chain)
Arete Invest SICAV
ARETE INDUSTRIAL SICAV
Novatec lnvestment Diseňo e lndustralización, S.L.
Credendo Short Terms EU Risks Credit Insurance Company
Global Payments Europe
O2 Czech Republic
The Czech National Bank
Czech Capital Market Association
Czech Association of Financial Intermediaries
J&T IB and Capital Markets
Benxy s.r.o. (formerly Zonky)
Intellectual property Tier 3
Kocián Šolc Balaštík acts for local and international clients and has particular strength in the pharmaceutical, healthcare, and life sciences sectors. Sylvie Sobolová is closely supported by senior counsel Hana Heroldová who has a specialism in IP litigation matters and regulatory work. Drahomír Tomašuk is the key contact for data protection issues.
Drahomír Tomašuk; Sylvie Sobolová; Hana Heroldová
Centrum chytrých fasád
Národní divadlo (National Theatre)
ARETE Property s.r.o.
REMA AOS, a.s.
FLAT ZONE s.r.o.
House of Wine
TMT Tier 3
At Kocián Šolc Balaštík, the team is noted for its 'excellent market view' and handles key transactions and regulatory advice for tech and communications clients. Led by Drahomír Tomašuk, the group has experience in data protection work and acts for both local and international companies across the media sector. Head of the disputes team; Pavel Dejl is the key contact for high-value litigation matters and proceedings before the Czech competition authority. The team also has an office in Ostrava and is well placed to act for clients operating in the region.
Other key lawyers:
Drahomír Tomašuk; Pavel Dejl; Jaroslav Zahradnicek
‘Strengths and key capabilities are experience and knowledge, reliability.’
‘High level of knowledge and skills, experience, reliability.’
‘Excellent expertise in all telecommunications law issues, excellent market overview, very responsive’
‘Jaroslav Zahradnicek, great to work with, very responsive, excellent work ’
O2 Czech Republic
Czech Media Invest
European Global Navigation Satellite Systems Agency (GSA)
Blackstone and Phoenix Tower International
Employment Tier 4
At Kocián Šolc Balaštík, the employment group has a strong transactional background and is active in complex advisory work for both domestic and international clients. Led by Václav Rovenský, the team handles M&A-related labour work, cross-border mandates across eastern Europe and has a wide tax offering. At associate level, Michal Hanuš handles corporate restructurings and counts various automotive companies as key clients.
Other key lawyers:
Lidl E-Commerce Logistics s.r.o.
Správa úložišť radioaktivního odpadu
Lidl Česká republika v.o.s
Real estate and construction Tier 4
Kocián Šolc Balaštík handles real-estate related transactions in the hotel and leisure, and residential development areas. Overseen by hotels specialist Václav Rovenský and Jiří Horník, the group handles complex advisory work related to regulatory matters, permit issues, and leases. Litigation matters also feature in the workload. Martin Krejčí advises on financing and structuring real estate deals.
Jiří Horník; Václav Rovenský
Other key lawyers:
Corinthia Palace Hotel Company Limited
Arete Invest Subfund CEE II
European Global Navigation Satellite Systems Agency (GSA)
Mattoni 1873 Group
Kocián Šolc Balaštík > Firm Profile
Firm overview: For over three decades, KŠB has been an acclaimed market leader, creating innovative and groundbreaking legal solutions for its clients involving new legislation and legal and business concepts. A proudly independent Czech law firm, KŠB is globally interconnected through long-term relationships with other leading independent law firms, with whom it frequently works on cross-border transactions. Its mission is to strategically guide its global and domestic clients in attaining and exceeding their business objectives in the Czech Republic. Delivering commercially driven and sector specific advice, the firm is not just ready for the future, but actively facilitating it in the evolving 21st century business world for the benefit of its clients, whose success is the firm’s greatest satisfaction.
Main areas of practice
M&A: A market leader in M&A and a recognised pioneer in using new legal concepts and transaction structures, KŠB advises on legal and tax structuring, asset and share deals, and corporate restructuring. It also provides highly focused and experienced legal and tax due diligence. Recently, KŠB advised Inner Mongolia Mengtai on its acquisition of European aluminum producer apt Group, and the transaction was acclaimed by China Business Law Journal’s Deals of the Year 2020. Other recent M&A transactions include work for Mattoni 1873, Deutsche Private Equity, MSX International, DIC Corporation and Menghem Equity.
Corporate: KŠB advises on establishing all types of companies, including Societas Europaea. Its services include companies’ incorporation, facilitating board and general meetings as well as relationships between management bodies, making changes to companies’ financial structures, arranging financial assistance and implementing mergers, divisions, and transformations of various company and partnership structures (including cross-border). One of the most high-profile cases was advising O2 Czech Republic on a globally exceptional voluntary unbundling and CETIN on a whitewash procedure for the largest financial assistance ever granted in the Czech Republic. Recently, the firm advised Solitea Group on one of the biggest intragroup mergers in the CEE region.
Banking and finance: KŠB advises on financial transactions as well as on banking and finance regulations. It provides legal services to lenders, arrangers, security agents and borrowers on senior, subordinated as well as mezzanine and bridge financing. KŠB is highly rated for its regulatory expertise (it has been advising the Czech National Bank for more than 20 years), and also covers new ground in FinTech. Its clients include members of Erste, Raiffeisenbank, Commerzbank, ING Bank, J&T Bank and UniCredit Bank groups. KŠB’s corporate clients in finance include members of the most important entrepreneurs’ group in the CEE region, such as O2 Czech Republic, Mattoni 1873 and Boels.
Securities and capital markets: KŠB advises issuers, shareholders and leading domestic as well as foreign investment banks and funds in the entire spectrum of securities and capital market deals, mainly on various types of bond financing. KŠB also focuses on pioneering the innovative solutions, such as the crowdfunding platform Fundlift or additional Tier 1 instrument for J&T group. KŠB is also well known for its extensive capital market regulatory experience. On the corporate side of transactions, KŠB designed a variety of securitisation instruments as well as other complex debt securities. The most notable clients here are O2 Czech Republic, J&T Bank group, and Czech National Bank.
Competition: KŠB assesses potential anticompetitive agreements and alleged abuse of dominance. It also represents clients before the Czech and European Competition Authorities and the courts, in all competition matters, including merger clearance procedures and leniency or settlement procedures. It was awarded the European Competition Case of the Year 2015 for its victory at the ECHR in which it represented DELTA PEKARNY regarding unlawful dawn raids in the Czech Republic. KŠB has recently been representing clients (such as Asiana and LEO Express) in private competition enforcement matters. Other competition clients include Mattoni 1873, Agrofert, the Czech National Bank, and Skanska.
Litigation and arbitration: Repeatedly recognised as one of the best practices in the Czech Republic, KŠB represents clients in civil and administrative courts and arbitration panels in all kinds of legal disputes in particular relating to contracts, damages compensation, corporate matters, including invalidity of general meeting resolutions, employment law, unfair competition and infringement of intellectual property rights. Recently, KŠB has been representing many clients in disputes, such as Heineken Czech Republic, PPF Group, the Czech National Theatre, Czech Television, O2 Czech Republic, and Czech Radio.
Energy (including mining): KŠB is best known in the energy sector for its expertise and success in the planning, development, implementation and operation of large-scale power and heat generation developments. KŠB represents clients in negotiations with administrative offices and advises on energy regulation. Its clients include Alpiq, REMA AOS, Carthamus, Green Gas DPB, RWE and ČEZ. Recently, KŠB has been advising Lovochemie on developing a brand-new unit for producing UGL fertilisers.
Real estate: KŠB advises leading CEE developers in logistics, retail and residential sectors, fast-growing investment funds focusing on industrial properties, and real estate project financiers. Recently, KŠB represented J&T Banka in the acquisition of its new headquarters in Prague and ARETE Invest on the disposal of its logistics park portfolio to Cromwell. Its clients also include ČEZ, J&T Real Estate, Moravská stavební Group, Passerinvest Group, VGP Group, and YIT Stavo.
Aviation: KKŠB is prized for its unique expertise in aviation, including aircraft financing, regulatory issues and claims handling. Its clients include ABS Jets, BBAM Aircraft Leasing, Cirrus Aircraft, easyJet, Macquarie Aviation, Prague Airport and XL Insurance. KŠB also advises the European GNSS Agency on issues linked with the deployment of the EGNOS, which provides augmentation to the standard GPS and Galileo signal.
TMT/IP/IT: KŠB advises and assists in connection with telecommunications law, including privatisation of telecommunications companies, and advice on tenders for operators of electronic communications networks and electronic telecommunications service providers. KŠB also has a full-service intellectual property practice, with experienced lawyers in all areas of intellectual property law, including IT, e-commerce and unfair competition. KŠB advises on regulatory issues, including advertising and personal data protection. KŠB’s clients include O2 Czech Republic, Deutsche Telekom and Daimler.
Employment: KŠB advises on standard employment agreements, agreements for managers and top management, including service agreements, work assignments (secondments) and agency employment, to the relations with trade union organisations/employee councils and workplace injury-related matters. KŠB’s clients include Quanta Human Resources, North Carolina University, DAF Trucks, Corinthia Hotels and the Czech National Theatre.
Tax: Recognised repeatedly by international and domestic ratings agencies, KŠB’s tax team has enhanced its reputation in the specific areas of taxation of international mergers and acquisitions and other transactions, corporate income tax, VAT and tax proceedings and disputes. KŠB is able to take advantage of mutual synergies, thus bringing undeniable benefits to clients (e.g. Czech Television, Czech Radio and Mattoni 1876).
|M&A, Corporate Restructuring||Dagmar Dubecká, Partneremail@example.com||+420 224 103 316|
|M&A, Corporate Restructuring||Martin Šolc, Partnerfirstname.lastname@example.org||+420 224 103 316|
|Competition Law, Litigation & Arbitration||Pavel Dejl, Partneremail@example.com||+420 224 103 316|
|Real Estate, Aviation||Jiří Horník, Partnerfirstname.lastname@example.org||+420 224 103 316|
|Company Law, Insurance Law||Petr Kasík, Managing Partneremail@example.com||+420 224 103 316|
|Banking, Project Finance including PPP||Martin Krejčí, Partnerfirstname.lastname@example.org||+420 224 103 316|
|Company Law, Mergers & Acquisitions||Jan Lasák, Partneremail@example.com||+420 224 103 316|
|Tax||Helena Navrátilová, Tax Partnerfirstname.lastname@example.org||+420 224 103 316|
|Securities and Capital Markets, Investment Funds||Vlastimil Pihera, Partneremail@example.com||+420 224 103 316|
|Energy and Mining Law, Utilites Law, Construction Law||Václav Rovenský, Partnerfirstname.lastname@example.org||+420 224 103 316|
|Public Procurement and State Aid, Intellectual And Industrial Property Law||Sylvie Sobolová, Partneremail@example.com||+420 224 103 316|
|TMT, Data Protection||Drahomír Tomašuk, Partnerfirstname.lastname@example.org||+420 224 103 316|
|Company Law||Jan Dědič, Partneremail@example.com||+420 224 103 316|
|Mr Jan Černohouz||Counsel||View Profile|
|Martin Šolc||Partner||View Profile|
|Jan Dědič||Partner||View Profile|
|Pavel Dejl||Partner||View Profile|
|Dagmar Dubecká||Managing Partner||View Profile|
|Ms Hana Heroldová||Counsel||View Profile|
|Jiří Horník||Partner||View Profile|
|Petr Kasík||Partner||View Profile|
|Martin Krejčí||Partner||View Profile|
|Mr Martin Kubík||Counsel||View Profile|
|Jan Lasák||Partner||View Profile|
|Helena Navrátilová||Partner||View Profile|
|Mr Vlastimil Pihera||Partner||View Profile|
|Mr Ivo Průša||Counsel||View Profile|
|Václav Rovenský||Partner||View Profile|
|Mr Tomáš Sequens||Counsel||View Profile|
|Sylvie Sobolová||Partner||View Profile|
|Drahomír Tomašuk||Partner||View Profile|
Staff FiguresLawyers : 60 Tax advisors : 6
LanguagesEnglish German Italian Russian French Slovak Czech
MembershipsIBA (International Bar Association) World Services Group (WSG) Employment Law Alliance (ELA) L2B Aviation Corporate Tax Alliance Czech-German Chamber of Industry and Commerce Czech Capital Market Association
Doing Business In
The Czech Republic, being formerly part of the Austro-Hungarian Empire, has a continental civil code based legal system based on Roman law. After forty years of communist rule, it began its transformation from a centrally planned economic system to a market economy after the so-called “Velvet Revolution” in 1989. From 1990 onwards it has consistently attracted large volumes of foreign investment. The Czech Republic became a member of the European Union as of 1 May 2004 and in the lead up to the EU accession, Czech laws were harmonized with EU law.
International investors are attracted to investing in the Czech Republic for a variety of strategic reasons, including the following:
- Central location
The Czech Republic is conveniently located at the geographical centre of Europe.
- Access to EU markets
The Czech Republic’s EU membership allows for total free movement of capital, goods, people and services within all EU member states. Located geographically within the heart of Europe, the Czech Republic is also very conveniently located from a logistical point of view for access of goods to other EU markets.
- Economic and Political Stability
From the time of the Velvet Revolution in 1989, the Czech Republic has been acclaimed by investors for both its political and economic stability, which was particularly demonstrated in its quick recovery from the international financial crisis of 2008/2009.
- Favourable labour costs
The Czech Republic still enjoys lower labour costs than the “Western” or longer established EU members, thus investors and employers benefit from the same skill level at a lower cost.
- Skilled workforce
The Czech Republic has a highly skilled workforce, particularly in technology and engineering. Educational and literacy levels are high. Companies report few difficulties in recruiting skilled and unskilled workers, particularly in industrial areas where unemployment is highest. Nevertheless, the total unemployment rate in the Czech Republic has been law for many years, in September 2020 it was 3.8% but this is a 2 year historic high, likely due to the impact of Covid-19.
- Non-discrimination of foreign vs. domestic investors
Foreign and domestic companies are treated identically in all areas under Czech law. At present, review of foreign investment projects applies to certain cases in the banking and defence sectors. Foreign legal entities may acquire real estate in the Czech Republic without any restrictions and under the same conditions as Czech legal entities. Nevertheless, as a result of the EU Foreign Investment Screening Regulation that entered into effect in April 2019, a new Foreign Investment Screening Act has been prepared and is in the process of implementation. The Act will address the screening of foreign investment entering the Czech Republic from outside the EU as well as monitoring potentially risk capital inflows into the Czech Republic from outside the EU.
- Popular as an FDI destination
The Czech Republic is one of the most successful CEE countries in terms of attracting foreign direct investment. According to the Czech National Bank, a total amount of more than EUR 130 billion worth of FDI has been recorded since 1993. The Czech Republic hosts almost 100,000 foreign companies of all sizes. Famous multinational companies such as ABB, Continental, Ford, Nestlé, IBM, DHL, Astra Zeneca, Rockwell, Procter & Gamble, Renault, Siemens, Tyco, Honeywell, Amazon and Volkswagen have significant subsidiaries in the Czech Republic.
- Competitive advantage
According to the 2019 Global Competitiveness Report published by the World Economic Forum, the Czech Republic ranks 32nd among 141 world economies in terms of competitiveness, placing it at the top of the CEE countries in competitiveness.
The Czech Republic is characterised as a mature host country for FDI with low inflation, modest interest rates, a relatively stable and fully convertible currency (CZK – Czech koruna) and a good rate of economic growth providing favourable conditions for investors. The Czech Republic was the first CEE country to be admitted into the OECD and is a member of NATO, the WTO, IMF and EBRD.
- Investment protection
The Czech Republic is a member of the Multilateral Investment Guarantee Agency (MIGA), an international organisation for protection of investments, which is part of the World Bank-IMF group. The country has signed a number of bilateral treaties which support and protect foreign investments, for example with the United States, Germany, the United Kingdom, France, Austria, Switzerland, Italy, Belgium, Luxembourg, the Netherlands, Finland, Norway, Denmark and China.
- Avoidance of double taxation
The Czech Republic has treaties to prevent double taxation on dividends, interest and royalties with many countries, including all EU countries, United States, Japan, Australia and Canada and numerous others.
- Repatriation of profits
There are no restrictions on distribution and repatriation of profits by Czech subsidiaries to their foreign corporate parents, aside from the need to pay withholding tax and for joint stock and limited liability companies, the need to maintain a mandatory reserve fund, which requirement applies to all Czech companies.
Foreign Exchange and Regulatory Aspects of Foreign Investment
The currency of the Czech Republic is the Czech Crown. Although eventual adoption of the EURO is expected, there is currently no specific timetable for its adoption. There are no foreign exchange controls or restrictions; currency is freely exchangeable pursuant to the Act No. 219/1995, Coll., the Foreign Exchange Act, as amended, and several implementation decrees of the Czech National Bank.
Choice of business entity
Foreign investors will generally choose either a limited liability company (s.r.o.) or a joint stock company (a.s.) as their Czech corporate entity investment vehicle, although a branch office of the foreign company is also sometimes used.
The s.r.o. is a very popular legal form for small and medium-sized businesses in the Czech Republic because it requires a lower minimum capital investment and fewer corporate governance requirements than an a.s. The Czech joint stock company´s minimum amount of the registered capital is CZK 2,000,000. A limited liability company´s minimum amount of the registered capital is CZK 1 (however, every shareholder has a minimum contribution obligation of CZK 1).
Neither a limited liability nor a joint stock company is required to keep a reserve fund to cover losses.
For the establishment of Czech branch office, there is no registered capital required. It should be noted that a branch office does not have legal capacity on its own accord under Czech law, its authorization and capability to act is based on the legal capacity of its founder under the respective foreign law of the founder.
Foundation and registration of s.r.o. and a.s.
Both the s.r.o. and the a.s. are founded by conclusion of a founding document. It is also possible to conclude a founding document based on a power of attorney. There are no restrictions on who the founder can be (e.g. also foreigners). The founding document needs to be notarized by a Czech notary and any changes made to the founding document during the existence of the company shall be notarized as well.
Both the s.r.o. and the a.s. are created as legal entities upon their registration in the Commercial Register. The Commercial Register contains the most relevant information about the Company, its shareholders (which does not apply to the a.s. except for when the a.s. has a sole shareholder) and the members of the company’s bodies. The founding document as well as other relevant documents (e.g. company’s financial statements) shall be filed in the Collection of Documents of the Commercial Register. The Commercial Register, including the Collection of Documents, is accessible to public at www.justice.cz.
s.r.o. (limited liability company)
A limited liability company does not issue shares, its participants acquire an ownership interest or a participation interest. The founding documents may, however, allow for the company to issue so called ownership/participation interest certificate to participants, which has the same function as shares in the a.s.. The founding documents of an s.r.o. may also allow for the existence of various types of ownership interest (e.g. such as a fixed share in profit or with special rights/duties attached or without voting right etc.).
a.s. (joint stock company)
A joint stock company issues shares to its shareholders, which may be either registered shares or bearer shares. Registered shares are either issued as certified shares or can be maintained as book entry (computer entry) securities at the Central Securities Depositary or can be immobilized (physically deposited). Bearer shares may only be in the form of book entry securities or immobilized shares. The joint stock company may also issue preference shares (non-voting unless otherwise stated in the founding documents), and other types of shares (e.g. with special rights attached or without share in profit etc.) or shares with or without a nominal value.
The shares of a joint stock company may have separately transferable rights, thereby for example, rights to distribution of profits, preferential subscription rights and rights to share in a liquidation surplus may be transferred separately from the share.
A joint stock company may issue convertible bonds and preference bonds.
Company and Shareholder Liability
As far as a company´s liability is concerned, both the Czech joint stock company and limited liability company are liable with its entire property for its breach of obligations. However, shareholders of a joint stock company are not during the existence of the company liable for breaches of company´s obligations at all. Members of a limited liability company are jointly and severally liable for the company´s obligations up to the unpaid contributions of all members to the registered capital. A Branch office is not liable for breach of its obligations; the parent company is fully liable for it.
Management and corporate structure
An s.r.o. must have at least one executive and also the general meeting (of all shareholders) as its obligatory bodies (supervisory board is only voluntary). The general meeting must take place once a year.
An a.s. must have, alongside the general meeting, one of the following structures:
- Board of directors and supervisory board (dualistic structure).
- Management board and statutory director until 31 December 2020, and only Management board as of 1 January 2021 (monistic structure).
For an a.s., the Act on Commercial Corporations makes it possible to choose between a ‘monistic’ and ‘dualistic’ model of corporate governance. The monistic model is based on the Management Board appointed by the general meeting, in which the powers of both the Board of Directors and of the Supervisory Board are vested. Until 31 December 2020, the general meeting appoints however also a second body of the company, a Statutory Director (who may be an individual outside the Management Board); the founding document may stipulate that the Statutory Director is appointed by the Management Board. The Statutory Director acts on the company’s behalf towards third parties. The chairman of the Management Board may be the same individual as the Statutory Director. As of 1 January 2021, the monistic a.s. will no longer create a body of a Statutory Director and the single body of the monistic a.s. will be the Management Board, appointed by the General Meeting, unless the Articles of Association stipulate that the right to appoint and revoke the Management Baord is a right connected with the share. All members of Management Board will be entitled to act on the company’s behalf towards third parties.
In the case of a dualistic structure in a.s. which has more than 500 employees, 1/3 of the members of the Supervisory Board must be elected by the employees.
A Czech Branch office must have a Head of branch office who is entitled to act on behalf of the parent company as regards the branch office.
Investment incentives in the Czech Republic
The Czech Republic offers a variety of investment incentives. The most prevalent in recent years have been incentives for investments in the manufacturing industry, but the range of eligible projects now include business support services, covering shared service centres, software development centres, high-tech repair centres and data centres. As incentives are considered state aid, they are granted in full compliance with EU state aid regulations.
Incentives are provided under the Act on Investment Incentives, and consist of:
- income tax relief for up to ten years for a new company established for an investment project and partial tax relief for up to ten years for an existing company which will be expanding an investment project
- cash grant for up to 20% of capital investment in certain strategic projects
- employment subsidies in the form of grants for job creation and training with respect to technology centres (available only in regions with high unemployment rates)
Register of Beneficial Ownership
In 2018, compulsory registration of companies’ beneficial owners into the Register of Beneficial Owners was introduced. The Register is not public and the information in it is only accessible to selected public authorities.
Management rights, i.e. the right to act on the company’s behalf, can be restricted by the corporate documents of the company or decisions of the general meeting. However, it is possible that the manner of acting on behalf of the company is, for example, determined in such a way that certain executives are entitled to act solely in relation to some matters and for other matters, two executives must act jointly – if this is registered in the Commercial Register, then it will be effective in respect of third parties, this also applies in respective of a multi member board of directors in an a.s. Restrictions are not effective on third parties, so any breach only gives rise to managers’ liability. There are no specific restrictions on foreign managers.
Directors’ and officers’ liability
Directors and board members must, in particular:
- Act with the duty of care of a prudent business manager.
- Act in the best interests of the company.
- Keep the shareholders informed about matters related to the company.
Directors/board members may be personally liable for:
- Damage caused to the company resulting from a violation of their duties (which also applies in the event of the company’s insolvency).
- Administrative or criminal offences.
- A director’s liability cannot be limited by agreement with the company, any such arrangement is null and void.
Taxes on corporate income and gains
Corporate income tax
Tax resident enterprises are subject to tax on their worldwide income. An enterprise is considered to be a tax resident enterprise if it is incorporated in the Czech Republic or if its management is located here. Czech non-resident enterprises are taxed on their income sourced in the Czech Republic only and such taxation may be limited by respective tax treaty. The standard corporate income tax rate in the Czech Republic is 19 %.
Companies may select a calendar year or a fiscal year as its tax year. Tax declarations must be filed within three months after the end of the tax year. Companies that are subject to a statutory audit or are using a certified tax advisor for preparation and submission of the declaration are automatically granted a three-month extension.
Capital gains realized by a Czech or another EU parent company on the transfer of shares in a subsidiary established in the Czech Republic or another EU country are exempt from tax if the parent company maintains a holding of at least 10 % of the subsidiary for an uninterrupted period of at least 12 consecutive months. Capital gains realized by a Czech or EU parent company on the transfer of shares in a subsidiary in a contracting country (that is a third country that has entered into a tax treaty with the Czech Republic) are also exempt from tax if the following conditions are met:
- The subsidiary has a legal form comparable to a Czech joint-stock company, a limited liability company, a cooperative.
- The parent company has held an ownership interest of at least 10% in the subsidiary for at least 12 consecutive months (this condition may be fulfilled subsequent to the date of the transfer).
- The subsidiary is liable to a tax similar to corporate income tax at a rate of at least 12% in the tax period in which the parent company accounts for the respective capital gain and in the preceding tax period.
If any of the following circumstances exists the tax exemption does not apply:
- The parent company or the subsidiary is exempt from corporate income tax or similar tax applicable in its jurisdiction.
- The parent company or the subsidiary may opt for an exemption from corporate income tax or similar tax applicable in its jurisdiction.
- The parent company or the subsidiary is subject to zero corporate income tax or similar tax applicable in its jurisdiction.
Other realized capital gains are included with other taxable income and taxed at the regular corporate income tax rate.
Generally, dividends are subject to a final withholding tax at a rate of 15 %. The tax rate is increased to 35 % for dividends paid to Czech tax non-residents from countries outside the EU and European Economic Area that have not entered into a double tax treaty with the Czech Republic or a bilateral or multilateral tax information exchange agreement that is binding on both the Czech Republic and the respective foreign country. However, dividends paid by Czech companies to parent companies that are located in EU countries are exempt from withholding tax based on the EU Parent-Subsidiary Directive, i.e. if the parent company maintains a holding of at least 10 % of the distributing company for an uninterrupted period of at least one year. Dividend distributions between two Czech companies are exempt from tax under similar conditions.
Interests and royalties
Interests and royalties sourced in the Czech Republic are generally subject to withholding tax in the Czech Republic at 15 % tax rate. However, the exemption applies if the recipient is a foreign corporation that is eligible for the benefits arising from the EU Interest-Royalty Directive. Moreover, recipients who are tax residents of countries with which the Czech Republic concluded respective double tax treaty may usually benefit from lower tax rate provided that they are actual beneficial owners of received interests or royalties.
In the absence of income tax treaties and also in the event that a person does not qualify for treaty benefits that would be otherwise available, the withholding tax rate is 35 % of the gross interest or royalty income
Personal income tax
The income that is subject to taxation in the Czech Republic is all income for tax residents and all income from source in the Czech Republic for tax non-residents. Personal income tax is paid by employees, self-employed individuals and other individuals realizing annual income higher than CZK 15,000 which not exempt from tax and not subject to a withholding tax. The personal income tax rate is flat rate of 15 % and is applied on both active and passive income (e.g. capital gains, dividends, interests). The employees tax base (called “super-gross income”) consists of the employment income and the social security and health insurance contributions paid by the employer in the Czech Republic, in the European Union, European Economic Area or in the Swiss Confederation). In addition, the annual employment income and self-employment income exceeding 48 times the amount of the average wage in total (e.g. CZK 1 672 080 for the year 2020) is subject to a so-called solidarity surcharge amounting to 7 %.
Individuals who received income exempt from personal income tax where such income was higher than CZK 5 million in an individual case are required to notify the tax authority of such fact. Not announcing of the tax-exempt income is penalized.
Value-added tax (VAT)
VAT is levied on all taxable supplies (goods and services), acquisitions of goods from other EU member states and imports of goods. Standard rate applicable to most goods and services is 21%.
Reduced rate applicable to specified goods and services (for example to food and beverages, plants) and it amounts to 15%. Second reduced rate applicable in particular to accommodation services, books, pharmaceuticals and baby food and it is 10%.
Real estate tax
Real estates located in the Czech Republic are subject to real estate tax which applies on a yearly basis.
Road Motor Vehicles tax
If the taxpayer uses a road motor vehicle registered in the Czech Republic for business purposes, as well as trucks with a maximum gross weight exceeding 3.5 tonnes regardless of their use, the taxpayer is liable to pay road tax.
Social security and health insurance contributions
Income from employment and self-employment activities is subject to the social security and health insurance contributions. In case of employees it consists of the amounts paid by the employee and the employer. The amounts are calculated from gross wage of the employee. The person responsible for transfer of the contributions to the respective Czech institution is employer. Self-employers pay the advances for social security and health insurance by themselves to the relevant institution on a monthly basis.
Social security insurance
Employer 24.8 %
(maximum assessment base is CZK 1 672 080 in 2020)
(no maximum assessment base applies.)
Social security 29.2 %
Health insurance 13.5 %
Covid- 19 Czech Government Support Measures for Business in 2020
As the Covid-19 pandemic unfolded around the world from March 2020 onwards, the Czech government introduced a variety of business support measures to support employers and business entrepreneurs. These legislative measures are being amended and/or being phased in and out in real time, please visit our Covid-19 blog for a current overview of applicable Czech government Covid-19 measures affecting business. https://www.ksb.cz/covid/en