SRO Formation - Frequently asked Questions . FAQ - Company formation in Czech Republic, Prague Consultants

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Our Services | Investing Opportunities | Buying Property | :: SRO Startup

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Questions About SRO Startup

:: What exactly is an SRO and do I need one?
:: Are there other benefits of owning an SRO?
:: What exactly are the long-term costs of owning an SRO?
:: Can you please explain the foreign terms regarding SROs?
:: How exactly does the SRO startup process work?
:: An SRO has ongoing costs and I am an EU citizen. Can't I simply buy property
or conduct business in the Czech Republic as an individual - without
establishing an SRO?
:: What do the Czech terms SRO and AS stand for?

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What exactly is an SRO and do I need one?

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Forming a Czech limited-liability corporation, called an SRO, is the fastest, most convenient and cost-effective way for a foreign citizen to establish themselves as a resident in the Czech Republic with all the required visas, a tax base, health insurance, and the many benefits of being a legitimate resident.

An SRO is required for any non-EU citizen (except for those from 'favored nation' countries See discussion) to purchase property in the Czech Republic, and highly encouraged for all EU and local citizens. Why is it so encouraged?

Because for both EU citizens and non-EU citizens alike, forming an SRO allows you as a foreigner to purchase property - start a business - or relocate an existing company in the Czech Republic safely, legally, and with the appropriate tax and liability shelters to protect your assets both here and at home from legitimate, or fraudulent lawsuits.

The good news, is that with our company forming your SRO is straightforward, affordable and simple. What’s more, you can do it with complete confidence.

We do not manufacture “bulk” SROs, but work with all of our clients one at a time from scratch - assuring that your project large or small receives our personal attention at every step, and that your completed company is free of legal or tax entanglements created by any previous owners.

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Are there other benefits of owning an SRO?

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Yes there are many benefits, and they include but are not limited to:
You may easily form a company, small business or perform freelance consulting and/or teaching in the Czech Republic legally and legitimately.

You may use the Czech Republic as a legal tax base for income earned here or abroad.

You will more easily qualify to acquire a Long Term Visa (non-EU citizens), health and social insurance for yourself, your spouse, children, partners and employees in order to live and work legally and safely in the Czech Republic.

You may purchase a property in the Czech Republic for business, residence, holiday or investment purposes (required for non-EU citizens) without restrictions (for all foreign citizens) that are otherwise attached to the types of property you can purchase.
...and much more.

In a nutshell, an SRO provides you with the tools you need to operate legally and responsibly as a foreign citizen in the Czech Republic, whether you reside locally in this country or abroad.

This is all in addition, of course, to the essential tax and liability protection provided legally by an SRO, which prevents your properties and personal assets from being attached in the case of a legitimate, or fraudulent, lawsuit.

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What exactly are the long-term costs of owning an SRO?

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The long-term costs associated with owning an SRO are very simple, and can be broken down into three items:

1. Registered Office Rental, or “Sidlo”

The Sidlo is the address where your business will be located. Typically this is not the actual physical address, but simply a physical location where you will receive all official mail for your SRO. Our fee (November 2006) for this service is 1.400 CZK per month. If the purpose of your SRO is only for real estate and you purchase a property, it is possible to move the sidlo to your new property.

2. Yearly Business Accounting

For property-only SROs, our charge (November 2006) is a maximum of 8.000 CZK per year. Business SROs can contract with our accountant according to standard agreement.

3. Yearly Tax Filing

Again, for property-only SROs, our charge (November 2006) is a maximum of 8.000 CZK per year. Business SROs can contract with our tax professional according to standard agreement.

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Can you please explain the foreign terms regarding SROs?

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Czech law requires that these four requirements are met for every SRO, with the exception of the Z. List (see below), which is not actually required if you will be using the SRO for property purchases only. Czech Point 101 can provide you with any or all of these requirements for a set fee if you wish.

Sidlo - pronounced 'SEED-lo'

The Sidlo is the address where your business will be located. Typically this is not the actual physical address, but simply a physical location where you will receive all official mail for your SRO. If you intend to buy property with your SRO then your new property can become your Sidlo.

Jednatel - pronounced "YED-na-tel"

The Jednatel is your company executive (CEO) in the Czech Republic. They are responsible for all the basic functions of your business, such as proper accounting, tax reporting, contracts and banking. Who your Jednatel will be is by far the most important consideration you will have when forming your SRO.

Please view our newsletters for the latest legal requirements for the 'Jednatel' position.

Zastupce - pronounced "ZAS-toop-seh"

The Zastupce is the company representative, who insures that your business meets the requirements of the local Trade Office. Typically, this person has no function except to meet the legal requirement that you have one, in which case you can function as your own Zastupce.

However, in certain circumstances (such as if your business will be handling food or toxic chemicals) your Zastupce must be a licensed, experienced professional whom you must hire on as a paid employee of the company.

Zivnostensky ("Z") List - pronounced "ZIV-no-sten-ski"

Use a soft "z" like the "s" in the English word "treasure. List is as the English word 'list.'"

The Z. List is the Trade or Business License your company will be provided when you form your SRO. For example, if your company will be performing computer repair, you will receive a Zivnostensky List for computer repair. You can apply for as many Z. Lists as you require. However, as with the Zastupce above, some Z. Lists may require proof of special education or experience.

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How exactly does the SRO startup process work?

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We provide comprehensive, quality legal work for all of your investment and property needs, but Czech Point 101 is not just an SRO provider.

In exchange for our affordable fees, our team provides personal assistance with the cultural, legal and financial issues involved in planning a sensible investment, and critically, we will minimize your exposure to the fraud commonly directed against foreign investors in this country's financial environment.

The entire SRO process through our company is fairly straightforward, and consists of 6 Steps which are detailed below.

The time until job completion includes about 3 to 6 weeks of filing forms, (depending on your location), then approximately 14 days for the Czech Commercial Register to issue your completed SRO certificate.

However, once the initial paperwork has been filed, (as quickly as 24 hours), you may begin conducting limited business with your company, such as signing lease agreements, almost immediately.

How Our SRO Startup Process Works, in 6 Steps:

Step 1: Call us to discuss your individual needs regarding the formation of your SRO. All phone calls to us are made free of charge with no obligation.

Step 2: Complete our simple 2-page SRO Questionnaire and send it back to us.

Step 3: Pay the required fees for the formation of your SRO. Our flat fee includes all legal, filing and tax costs plus all state fees.

Step 4: Fulfill the four legal requirements of your Sidlo, Jednatel, Zastupce and Z. List (the last two only if you will do business with your SRO. All of these items are discussed briefly right here on this page.

Of course you can call us for free assistance with understanding these requirements at any time.

Step 5: Verify all documents which we will send you and sign them in front of a any Czech notary (if you’re here), or at the Czech Embassy or Consulate nearest you.

Step 6: Czech law requires an initial deposit of 200.000 CZK to complete the SRO process. This money is wired directly to your SRO account, not to us!

Once the deposit is received, the SRO will be registered usually within 14 days. No fees are taken from this deposit; the full amount is useable by your new company.

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An SRO has ongoing costs and I am an EU citizen. Can't I simply buy
property or conduct business in the Czech Republic as an individual
- without establishing an SRO?

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There are a number of considerations to answer this question and a lot has to do with your investment goals and risk tolerance. You can read a detailed description of the pros and cons of Czech residency versus SRO in terms of property purchase here.

The final decision is yours. We are able to assist you with either route and can give you advice based on your personal situation and investment goals.

Both avenues can also be done remotely making your trips to the Czech Republic more concentrated on your primary goal - finding your dream property.

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What do the Czech terms SRO and AS stand for?

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SRO (also s.r.o.): "Spolecnost S Rucenim Omezenim" An SRO is a Czech limited liability company. An SRO requires an intial investment capital of 200 000 CZK.

AS (also a.s.): "Akciova Spolecnost" An AS is a joint-stock company. Typically used for larger real estate or business ventures where there are numerous investors. An AS requires an initial investment capital of 2 000 000 CZK or 20 000 000 CZK if the company is started through an initial public offering of shares.

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