E-Residency vs. Physical Residency: What You Need to Know Before Establishing a Czech Company

Marketing Mirr Asia
1 day ago
4 min read

As the digital economy expands, entrepreneurs from around the globe are eyeing Central Europe for stable, tax-efficient, and EU-compliant company formation options. Among these, the Czech Republic has emerged as a compelling destination for foreign founders.

But as Estonia’s e-residency model gains traction and other nations like Lithuania and Georgia roll out digital-friendly business policies, many ask: Can I establish a Czech company without living there?

This guide compares e-residency and physical residency in the context of Czech business incorporation — helping you understand the legal, logistical, and tax implications of each approach.

What Is E-Residency, and Does Czechia Offer It?

E-residency is a government-issued digital identity that allows non-residents to open and manage a business remotely. Estonia is the best-known example, enabling full online incorporation and management.

The Czech Republic, however, does not offer an e-residency program. Yet both EU and non-EU residents can legally establish and operate Czech companies.

According to the Czech Ministry of Industry and Trade, non-residents can freely establish and own Czech entities if they maintain a local registered office and meet notary and identification requirements.

(Official reference: BusinessInfo – Establishing a Trade Licence)

Establishing a Czech Company as a Non-Resident

Czech law allows foreign individuals and legal entities to form and own 100% of a Czech limited liability company (s.r.o.).

You’ll need:

Registered office address in Czechia (mandatory)
Founding documents notarised and apostilled
Company name registration with the Commercial Register
Minimum share capital of CZK 1 per shareholder
Appointed managing director (may be non-resident)

Foreign public documents must be apostilled/super-legalised and accompanied by a sworn Czech translation before filing.

While a local presence isn’t mandatory, most founders either visit once or appoint a power-of-attorney representative to handle filings, translations, and local compliance.

If you’re planning to establish your business remotely, explore Czech company formation services provided by Mirr Asia for professional support in setup, tax registration, and compliance.

E-Residency vs. Czech Company Formation: Key Differences

Feature	E-Residency (Estonia)	Czech Republic
100% remote setup	Yes	Not entirely – POA or one-time visit typically required
Digital ID provided	Yes	No
Local bank account	Difficult without presence	Possible with Czech banks or EU fintechs (may require in-person KYC)
SME tax incentives	Yes (Estonia)	Standard EU regime – 21% CIT (Government portal – Corporate Income Tax Rate )
Government infrastructure	Fully digital	Traditional, notarised system
Residency for management	Not required	Not required; Czech registered address & director still needed
Ideal for	Digital nomads, SaaS founders	Manufacturers, traders, EU expansion

The Czech Republic’s more traditional system provides strong legal protection, full EU access, and credible business substance for investors seeking stable EU presence.

How Physical Residency Affects Czech Company Formation

Physical residency is not required but can simplify key steps:

Banking: Most Czech banks require in-person KYC verification; fintech options vary.
Substance: To claim Czech tax residency, demonstrate economic substance (office, staff, or management in Czechia).
Trade licence (Živnostenské oprávnění): Certain activities require a licence before or during registration (see BusinessInfo – Establishing a Trade Licence).
Visa pathways: Company ownership may support a long-term business visa for non-EU founders.
Compliance: Local representatives assist with VAT, payroll, and filings efficiently.

For remote founders, using an agency with Power of Attorney is the most efficient and compliant route.

Tax Residency and Legal Implications

In the Czech Republic:

A company is tax-resident if it has its registered seat or place of effective management in Czechia.
Directors need not reside locally, though foreign management may raise questions under OECD “management and control” principles.
Czechia maintains around 100 double-tax treaties to prevent double taxation.
The Corporate Income Tax rate is 21% (verified by the Government portal – CIT rate).
UBO (Beneficial Owner) registration is mandatory under Act No. 37/2021 – view details at the Government Register of Beneficial Owners.

If your Czech company is managed from abroad, consult a tax specialist to ensure it doesn’t trigger home-country tax residency.

Managing a Czech Company Remotely: What’s Possible?

Czech corporate administration now combines traditional notarisation with digital submission systems.

You can do remotely:

Reserve company name
Sign incorporation via Power of Attorney
File incorporation and VAT registration electronically
Submit annual reports and taxes online

May still require presence:

Bank account KYC (varies by provider)
Notarising original founding documents
Visa or residence-permit applications (for non-EU citizens)

Once incorporated, a Czech company can be managed entirely online with digital signatures, cloud accounting, and authorised representatives.

Final Thoughts: Which Is Right for You?

If you prefer a fully digital setup, Estonia’s e-residency may be best for lightweight operations.

If your goal is to build a credible EU-based business with physical infrastructure, banking access, and long-term growth potential, the Czech Republic offers one of Europe’s most balanced environments. Its legal clarity, skilled workforce, and EU alignment make it a reliable jurisdiction for entrepreneurs expanding into Europe.