What could the government do to make it easier to create and run startups in Czechia?
Since commenting on the 15/23% company sales tax situation 2 weeks ago, there was a debate around how easy it is to have companies in the current ecosystem.
I was asked by several politicians what could the Czech government do to make things easier to run Czech startups — and why for example many startup opt-in to create a HQ structure in UK / US.
Here is my top list, feel free to comment with more:
- Need for notaries — Everywhere
- we need notaries for every change
- we cannot just sign a new investor via Docusign and bring in the money — this is a problem
- Employee Stock Options too taxed
- today, employee stock options have to be treated as an employment benefit, and taxed fully at salary rates incl. social and health benefit payments.
- Immigration — Employing foreigners is hard
- If I really want to employ someone tomorrow and I am willing to sponsor their stay and VISA, it takes a long process of several weeks — in an ideal case scenario — 2 months. With the Ministry of Interior affairs often being unreachable for days or weeks…
- Part-time Employment Options limited
- Today, we have options for full-time employees, contractors — but part time is extremely hard. Czech has 2+ million people with “contractor” (IČO) permits — because the part time employment system is just terrible.
- Zero benefits for creating jobs
- There are no benefits if you create hundreds of jobs in this country. You just go and create them — one wish there would be some sort of advantage
- VAT for software — I know this is a European / global issue…
My companies have most of their costs locally — but not all. We had to be a VAT payer, and a VAT deduction. But a huge majority of our deals were outside the country, which means we had a negative VAT (vratka) — so the government had to return VAT every month / quarter. This meant we would get a nice visit every month or two from the tax authorities (which we always passed with flying colors). To get hurt for the system being bad is not cool.
- Creating companies is slow
We are one of the worst countries in creating companies. It did get better, but compared to the UK experience — where its essentially filling out an online form and “downloading” your company, its still very difficult. And yet again, there are notaries! :)
- Too much bureaucracy
We are still a fairly bureaucratic system — despite numerous advancements. E.g. even if you pay everything by credit card — you still have to deliver physical bills to the government when asked. Noone does it, and they make copies on their phones — but it is still the law.