Do I Need a Local Entity to Hire in The Czech Republic?

In the Czech Republic, a "local entity" refers to a recognized business presence that can act as an employer, typically a subsidiary or branch office. This setup allows you to be recognized locally as an employer, fulfilling payroll and employment obligations.

Without a local entity, you typically cannot register as an employer, manage mandatory social security processes, run local payroll, or issue compliant employment terms. The Czech Social Security Administration outlines employer responsibilities for contributions, which are crucial for compliance.

What is Required to Employ Someone in The Czech Republic?

• Local employing entity required to directly employ? Yes (unless using an EOR)
• Payroll registration required? Yes (must register with the Financial Administration)
• Withholding/tax remittance required? Yes (mandatory payroll withholdings apply)
• Social contributions required? Yes (employer must pay social security contributions)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (statutory leave and social security coverage)
• Works council/collective agreements considerations? Often (many sectors have applicable collective agreements)

Best Options If You're Hiring in The Czech Republic

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but it comes with risks if the relationship resembles employment.

Hiring contractors in the Czech Republic doesn't require a local entity, but misclassification can lead to legal issues. Authorities may scrutinize the relationship to determine if it effectively functions as employment.

• Contractors should operate independently without significant direction.
• Exclusive work arrangements increase misclassification risks.
• Control over work hours or methods can indicate an employment relationship.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in the Czech Republic, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated CZK 5,000–15,000 per month ($220–$660)
• Payroll provider: Estimated CZK 1,500–4,500 per employee per month ($66–$198)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated CZK 20,000–60,000 per year ($880–$2,640)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in The Czech Republic

Hiring in the Czech Republic can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in the Czech Republic quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.