Holding Company in the Czech Republic

We offer turnkey registration of a holding company in the Czech Republic, including legal and tax substantiation.
Holding in The Czech Republic

Package includes:

    • Analysis of the current situation

    • Determination of the complete structure of the property and all other assets
    • Completing information on the relationships in the structure
    • Formulating the economic rationale for the transaction
    • Defining the objectives of the structure
    • Professional assessment

    • The legal-economic reasons for the transaction are explained (understandable for the financial administration)
    • Consideration of possible procedures and methods of implementation
    • assess the risks of each option
    • assess the capital distribution options in the structure
    • assess the tax implications of each option
    • The final output is a legal and tax analysis and a recommendation for a specific form of implementation. The assessment is key to identifying and explaining the economic rationale for the restructuring. Overall, this report is a comprehensive guide that will serve as a key resource for you and your accounting or financial managers. It aims to help you better navigate the process. The takeaway document can serve as a basis for communication with authorities and public bodies such as the tax administration.
    • Structure implementation

    • List of specific steps to complete the implementation
    • Instructions for book-keeping all transactions
    • Structure registration.

Who needs a holding company?

A Czech Republic-based holding company is a legally established entity designed to possess assets in subsidiary companies. It acts as a parent company with the authority to oversee the management and investment strategies of its smaller affiliate companies.

2 main reasons to register a holding company:

  1. Risk diversification. By owning assets in various subsidiary companies, a holding company in the Czech Republic can distribute its investment risk. Instead of placing all financial resources into one venture, the holding company spreads its investments across several entities. This strategy significantly mitigates the potential financial impact should one of the subsidiary companies experience economic difficulties. In essence, the holding company acts as a safety net, ensuring that the overall business structure remains stable and resilient in the face of individual company failures.
  2. Tax reasons
    • “Company Bank”. The holding structure allows for the tax-free movement of money from subsidiaries to the holding company. This arrangement can result in substantial savings, particularly for large corporations with multiple subsidiaries.
    • “Tax cushion” for a holding owner. Adding existing companies to a holding structure creates a possibility to pay off their valued amount as a tax-free transaction from a holding company towards the owner.
    • Lastly, Czech and EU tax laws allow holding companies to pay dividends to their parent companies tax-free. This provision can yield considerable savings for corporations, making the establishment of a holding company in the Czech Republic an attractive proposition.

Even though the main advantage of a Czech holding company is low maintenance costs, generally, it makes sense to register a holding structure from a turnover of 5 million Czech crowns (200 thousand Euros) or higher.

Why choose the Czech Republic as a holding company jurisdiction?

Most popular holding company destination in the EU is Luxembourg. Why should you consider the Czech Republic instead?

  • Significantly lower annual maintenance costs (hundreds of euros vs. hefty 10,000+ euros) with same EU-level benefits.
  • For those who are Czech tax residents, choosing the Czech Republic as your holding company's location eliminates the risk of foreign holdings being classified as Czech resident companies by tax authorities. This prevents any unexpected tax implications.
  • The Czech tax system is on par with the average EU level, striking an optimal balance between jurisdiction stability and a favourable tax system. This makes the Czech Republic a competitive choice for your holding company's domicile.

Additional services:

  • LLC (s.r.o.) company registration, incl. notary/state fees and 6 months of free accounting services - 36,000 CZK
  • Evaluation of subsidiary company 50,000 - 80,000 CZK
  • Annual tax report - 4,500 CZK
  • Tax consultation - from 3,000 CZK/hour
  • Legal assistance - from 3,500 CZK/hour.

Questions and Answers

  • Which tax rates are applicable to a Czech holding structure?
    • Corporate income and capital gain tax - 21%,
    • physical person income tax (for ex. dividends) - 15%.
  • Do I need to hire a Czech national to control the Czech Holding company?
    No, you don’t have to. However, you can think of using a Czech national or a lawyer as a Holding company director for a better operability from abroad. We do offer these services as well.
  • How can I diversify my business risks with a holding company?
    For example, you can separate your intellectual property from your operational subsidiary. In case that somebody sues your operational company, you can instantly open another and go on with your business w/o loss. Production companies can separate real estate ownership from operations and production.
  • I’m the owner of several businesses/investments. What is an optimal ownership structure for me?
    In this case another level of structure can be added above your business holding - your personal holding company. From the tax-free perspective, It will allow you to redistribute incomes from one subsidiary to another and use losses of failed startups.
  • I am a Czech tax resident at the moment, but I plan to move abroad in future. What is the optimal structure for me?
    If you are planning to move the centre of your life interests to another country and that country will happen to have a lower physical person income tax (less than Czech 15%), it will make sense to set up a holding company in a jurisdiction where payment of dividends to non-residents are not subjected to a withholding tax (in Czechia it is taxed 15% at the source). To mention a few suitable jurisdictions where we can help you to set up a holding structure: Luxembourg, Liechtenstein, Switzerland, Malta.
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