Banks & Finances Czech Republic

In the Czech Republic, many banks offer services tailored for foreign clients, ensuring ease and accessibility to banking products. Below are the banks considered most friendly to foreigners:

 

Česká spořitelna: The largest bank in the Czech Republic with an extensive network of branches and ATMs. Provides services in English, including online banking and a mobile app. Has special offers for students and foreign clients.

 

Komerční banka: A member of the international financial group Société Générale. Serves clients in English, offering a wide range of services, including online banking and mobile apps.

 

ČSOB (Československá obchodní banka): A universal bank that offers a full range of services for individuals and businesses. English service is available at branches and through online channels.

 

UniCredit Bank: An international bank with a presence in the Czech Republic. Offers services in English, including online banking and mobile apps.

 

Raiffeisenbank: Part of an international banking group, provides services in English. Serves both individuals and businesses, offering a wide range of products.

 

Fio banka: A Czech bank known for low fees and free account maintenance. Offers services in English, including online banking.

 

It is recommended to visit several banks to compare conditions and choose the most suitable option before opening an account.

Opening a bank account in the Czech Republic is a process available to both residents and non-residents. However, requirements may vary depending on the chosen bank and your status.

 

Basic steps for opening an account

 

Choosing a bank: Consider banks that offer services in English and have experience working with foreign clients. Such banks include Česká spořitelna, Komerční banka, ČSOB, UniCredit Bank, Raiffeisenbank, and Fio banka.

 

Preparing the necessary documents: A standard set of documents includes:

- A valid passport or identification card.

- Proof of residence address: such as a lease agreement or utility bill.

- Visa or residence permit: if applicable.

Some banks may require additional documents, such as proof of income or an employment contract.

 

Visiting the bank branch: Most banks require personal presence to open an account. It is recommended to schedule an appointment in advance and check if there is English-speaking staff at the branch.

 

Filling out an application and signing a service agreement: You will be asked to fill out an application with personal data and sign a service agreement.

 

Making an initial deposit: Some banks require a minimum initial deposit to activate the account.

 

Features for non-residents:

Non-residents may face additional requirements, such as:

- Proof of the purpose of opening the account: e.g., study, work, or investments in the Czech Republic.

- Recommendation letters: from the current bank or employer.

 

Note that procedures and requirements may change, so it is recommended to obtain the most up-to-date information directly from banks or on their official websites.

Using ATMs

In the Czech Republic, ATMs widely accept cards from international payment systems such as Visa, MasterCard, and UnionPay. To withdraw cash, it is recommended to use ATMs of major Czech banks, for example: Československá obchodní banka (ČSOB); Česká spořitelna; Komerční banka. These banks offer better terms and lower fees compared to independent operators.

 

Avoiding Dynamic Currency Conversion (DCC)

When withdrawing cash, the ATM may offer to choose between being charged in local currency (Czech koruna) or the currency of your card. Always choose the local currency to avoid additional fees and unfavorable exchange rates associated with dynamic currency conversion.

 

Fees and limits

Fees: Your bank may charge a fee for cash withdrawals abroad. It is recommended to verify the fee amount before the trip. Some banks offer cards with free cash withdrawals abroad under certain conditions.

Limits: ATMs in the Czech Republic usually allow withdrawals up to 10,000 CZK per transaction. If you need to withdraw a larger amount, you may need multiple transactions or contact the bank to increase the limit.

 

Recommendations

Avoid ATMs in tourist locations: ATMs located in airports, hotels, and tourist areas often charge higher fees.

Bank Transfers

Czech banks offer international transfer services, including SEPA payments in euros and SWIFT transfers in other currencies.

 

SEPA payments: Designed for euro transfers within the European Union and European Economic Area countries. Such transfers are usually processed within 1-2 business days and have a fixed fee.

 

SWIFT transfers: Used for sending money to other countries and currencies. Processing times can range from 2 to 5 business days, and fees vary depending on the bank and transfer amount.

 

Online Money Transfer Services

There are specialized online platforms that allow sending money abroad with minimal fees and favorable exchange rates.

 

Wise: Offers transfers at mid-market rates with transparent fees. Supports over 50 currencies and ensures fast transactions.

 

TransferGo: Ensures quick and inexpensive transfers, supporting numerous countries and currencies. It has a convenient mobile app and competitive rates.

 

Paysend: Allows sending money to bank cards and accounts in more than 170 countries worldwide with a fixed fee. Transfers usually take a few minutes.

 

Cash Money Transfer Services

If the recipient prefers to receive cash, companies providing such services can be used.

 

Western Union: Has a vast network of service points worldwide, allowing sending and receiving cash.

 

MoneyGram: Offers similar services with the possibility of sending and receiving cash in various countries.

 

Recommendations for choosing a transfer method:

Compare fees and exchange rates: Different services offer various conditions. Use online calculators on provider websites to calculate the final amount to be received.

Consider the speed of the transfer: Some services offer instant transfers, while bank transfers may take several days.

Check the availability of the service in the recipient's country: Ensure that your chosen service operates in the country where you are sending money and that the recipient can use its services.

Pay attention to limits and requirements: Some services impose limits on the transfer amount or require additional verification.

Foreign nationals residing in the Czech Republic have the opportunity to obtain a loan or mortgage; however, conditions and requirements may differ from those imposed on Czech citizens.

 

Foreigners can arrange a mortgage in the Czech Republic for purchasing real estate. Basic conditions include:

 

Down payment: For foreign nationals, banks usually require a down payment of 30–40% of the property value, while for locals, this figure may be lower.

 

Interest rate: Rates for foreigners can be higher, especially if the borrower's income is from outside the Czech Republic. Interest rates start from 1.89% per annum but may vary depending on the type of stay and income source.

 

Loan term: The maximum mortgage term for foreigners is usually 20 years, considering the borrower's age.

 

Documents: Required documents include a passport, proof of income, bank statement, and, in some cases, a residence permit in the Czech Republic.

 

Consumer Loans for Foreigners

 

Foreign nationals can also apply for consumer loans in the Czech Republic. Conditions depend on the specific bank and the status of the borrower:

 

Loan amount: Usually up to 500,000 Czech crowns.

 

Repayment term: Up to 28 years, depending on the amount and bank conditions.

 

Interest rate: From 4.5% per annum, but the rate may be higher for foreigners.

 

Requirements: Proof of income, residence permit or long-term visa, positive credit history.

 

Factors Affecting Loan Approval

 

Country of Origin: Banks may classify certain countries as "risk countries," which impacts lending terms.

 

Residency Type: Holding a temporary or permanent residence permit is an advantage when applying for a loan.

 

Income: The amount and source of income play a key role. Income earned in the Czech Republic increases the chances of loan approval.

 

Recommendations for Foreign Borrowers

Seek Consultation: Professional financial advisors can help choose the optimal lending option.

Real Estate Payment

 

Bank Transfer: The most common and secure method of paying for real estate in the Czech Republic is a bank transfer. After signing the sales contract, the buyer transfers the agreed amount to the seller’s account or a special escrow account managed by a notary or lawyer. The escrow account ensures the security of the transaction, as the funds are transferred to the seller only after the ownership rights are registered in the buyer’s name.

 

Mortgage Loan: If the buyer plans to use a mortgage, the bank transfers the funds directly to the seller after all the terms of the loan agreement are met. It is important to agree on all details with the bank in advance and ensure readiness for timely payment.

 

Car Payment

 

Bank Transfer: When buying a car from an official dealer or private seller, a bank transfer is the preferred method of payment. This ensures transparency and security of the transaction. Before the transfer, it is recommended to check all car documents and ensure there are no encumbrances.

 

Cash: There are restrictions on cash payments in the Czech Republic. According to the law, the maximum amount of cash payment between individuals is 270,000 Czech crowns. Exceeding this limit may result in fines. Therefore, for large purchases, it is recommended to use non-cash payment methods.

 

Car Loan: Many banks and financial institutions offer loans for car purchases. Terms depend on credit history, income, and other factors. Before applying for a loan, it is recommended to compare offers from different banks and choose the most suitable one.

 

Recommendations

Consultation with Professionals: Consult lawyers or financial advisors for transaction support to ensure its legality and security.

The Czech Republic offers a wide range of tools for saving, saving, and investing, allowing effective management of personal finances.

 

Bank Deposits

 

Savings Accounts: Offer flexible access to funds with the possibility of earning interest. Interest rates vary depending on the bank and current economic situation. According to a survey, 37.4% of Czechs prefer to keep money in savings accounts.

 

Term Deposits: Involve placing funds for a fixed term with a higher interest rate. Access to the money is restricted until the deposit term ends.

 

Investments in Stocks and Exchange-Traded Funds (ETF)

 

Stocks: Purchasing shares in companies to receive dividends and potential stock value growth. Investing in stocks requires an understanding of the market and readiness for risks.

 

ETF: Funds that track specific indices or market sectors, allowing portfolio diversification with lower costs.

 

Investment Funds

 

Professionally managed portfolios consisting of various assets, such as stocks, bonds, and real estate. Investors purchase fund units, gaining a share of its income. In the Czech Republic, there are several types of investment funds, including real estate funds and mixed funds.

 

Pension Savings

 

Additional pension insurance allows setting aside funds for retirement with government support and tax benefits. There are various investment strategies, from conservative to dynamic, depending on the investor's preferences.

 

Real Estate

 

Purchasing real estate for rental or subsequent sale is a popular way to invest. Real estate can provide a stable income and potential capital growth. However, it requires significant initial investment and consideration of maintenance expenses.

 

Precious Metals

 

Investing in gold and other precious metals is considered a way to protect capital from inflation and economic instability. However, metal prices can be volatile, and such investments do not generate regular income.

 

Recommendations for investors: Consulting financial advisors can help you choose the best strategies and tools that match your goals and financial situation.

In the Czech Republic, the tax obligations of foreign citizens depend on their tax status, which is determined by the duration of stay and source of income.

 

Tax Status:

 

Resident: A person living in the Czech Republic for more than 183 days in a calendar year is considered a tax resident. Residents are taxed on all their income, regardless of its source.

 

Non-resident: A person staying in the Czech Republic for less than 183 days a year is considered a tax non-resident. Non-residents are taxed only on income obtained from Czech sources.

 

Main Types of Taxes

 

Income Tax

Rate: For individuals, a progressive taxation scale is applied. Income up to a certain threshold is taxed at a rate of 15%, and the excess is taxed at a rate of 23%.

 

Resident Obligations: Residents must declare and pay taxes on all their income, including overseas income.

 

Non-resident Obligations: Non-residents declare and pay taxes only on income earned in the Czech Republic.

 

Value Added Tax (VAT)

Rate: The standard VAT rate is 21%. Reduced rates of 15% and 10% apply to certain goods and services.

 

Obligations: Foreign entrepreneurs conducting economic activities in the Czech Republic may be required to register as VAT payers and pay tax on relevant transactions.

 

Social Contributions

Obligations: Foreigners working in the Czech Republic under an employment contract must pay social and medical insurance contributions. Contributions are typically withheld by the employer from wages.

 

Double Taxation Avoidance Agreements

The Czech Republic has agreements with several countries to prevent double taxation. These agreements determine in which country and how certain types of income are taxed, allowing for the avoidance of double taxation on the same income.

 

Recommendations

Consult with tax professionals: Professional advice will help correctly declare income and take advantage of possible tax benefits.

In the Czech Republic, the process of filing a tax return for foreign citizens depends on their tax status and sources of income.

 

Determining Tax Status: Tax Resident or Tax Non-resident

 

Obligation to File a Tax Return

Individuals are required to submit a tax return in the following cases:

- If the total taxable income for the year exceeds 50,000 Czech crowns.

- If additional income not taxable at the source exceeds 6,000 Czech crowns.

- If there were multiple employers simultaneously, and income was not taxed at the source.

 

Filing Deadlines

- The standard deadline for filing a tax return is by April 1st of the following year.

- For electronic submissions, the deadline is extended to May 2nd.

- If the return is filed by a tax consultant, the deadline is extended to July 1st.

 

Ways to File a Return

- In person: At the local tax office in the place of residence.

- By mail: Sending the completed return by registered mail.

- Online: Through the official MOJE daně portal. This requires an electronic signature or access to an electronic mailbox.

 

Required Documents:

- Completed tax return form.

- Income statements from employers.

- Documents confirming entitlement to tax deductions and benefits (for example, confirmation of mortgage payments, charitable contributions).

 

Tax Deductions and Benefits

Tax residents of the Czech Republic are entitled to various deductions and benefits, including:

- Basic deduction for the taxpayer.

- Deductions for children and spouses.

- Deductions for mortgage interest and charitable contributions.

 

Non-residents have limited rights to deductions and benefits, depending on specific circumstances.

 

Recommendations: Professional consultation with tax experts can help correctly declare income and take advantage of possible tax benefits.

In the Czech Republic, self-employed individuals and freelancers, known as "OSVČ" (Osoba samostatně výdělečně činná), have specific rights, obligations, and benefits. Below are the key aspects to consider when conducting independent activities.

 

Registration and Starting a Business

 

To start a business, you need to register with the relevant authorities:

 

- Trade Registry: Registration is done by submitting an application for a trade license. For some types of activities, confirmation of qualifications or experience is required.

- Tax Office: After registration, you must register with the tax authorities within 15 days.

- Social and Medical Insurance: Mandatory registration with social and medical insurance authorities (your chosen insurance company) within 8 days of starting the activity.

 

Taxation

 

Self-employed individuals are required to pay income tax:

Tax Rate: 15% of the tax base. An additional rate of 23% applies for income exceeding a certain threshold.

Deductions: Opportunity to apply standard deductions and benefits, such as the basic deduction for the taxpayer, deductions for children and spouses.

Simplified Taxation System: Since 2021, the option to pay a single fixed tax, including income tax, social, and medical contributions, has been introduced. This system is available for entrepreneurs with an annual income of up to 1 million Czech koruna.

 

Self-employed individuals are required to make contributions to social and medical insurance

 

The Czech government provides various support programs for self-employed individuals

Grants and Subsidies: Available for certain sectors and projects. Information on current programs is published on the official websites of government institutions.

Consultation Services: Organizations such as CzechInvest and the Chamber of Commerce offer free consultations on business matters.

 

Recommendations: It is advisable to contact professional accountants or tax consultants to ensure compliance with the law.