Once your operations have come to an end or you have decided to move your business elsewhere – it will be necessary to liquidate the company. This is particularly important if there are profits to repatriate, if the directors of the company wish to retain a clean record, and reporting requirements are to cease. Americans, in particular, need to liquidate to avoid filing Controlled Foreign Corporation returns with the IRS.
There is no need to engage an attorney – they just employ accountants. We can appoint a liquidator from our own staff with the legal, accounting, business and statutory knowledge to accomplish the task from beginning to end. We will work closely with you to identify creditors, collect from debtors and interface with legal, tax, court and other officials. We can do all of this on the basis of a power of attorney from the shareholder(s).
Liquidation of a Czech LLC (an “s.r.o.”) is primarily regulated under the Commercial Law, 513/1991 Sb, §68, §70-75 and §151-153. There are two primarily roads to liquidation:
Wind-up: Under this method the shareholder meeting appoints a liquidator to assist in the liquidation of all assets and settlements of all liabilities to creditors and remittance of a liquidating dividend, if any, to shareholders. This procedure takes between 5-7 months, or often longer if creditors cannot be paid in full.
Transformation: Under this method a sole shareholder with residence in the Czech Republic can transfer all assets and liabilities to his registered sole proprietorship, dissolving the old s.r.o. in the process. This is done with no change in tax basis to the s.r.o.’s assets and unless the entity has undistributed net income, there will be no profit tax to pay. Transfer of real estate to your personal name is not subject to the 3% transfer tax.All existing liabilities and receivables of the company are automatically transferred to the sole shareholder personally - there is no need to renegotiate a mortgage, or loan or other agreements.
This is a complicated but necessary step to closing operations of your company. Please feel free to contact us to discuss your situation.
