Updated 27.11.2024
What are financial statements?
Financial statements consist of 3 documents: a balance sheet, a profit and loss statement and notes. The publication obligation applies to all companies entered in the Commercial Register – in practice, with few exceptions, this means limited liability companies, joint-stock companies and cooperatives (self-employed people may also register voluntarily, but in my view this adds unnecessary administration). They must comply within 6 months of the end of the tax period, typically by 30.6. of the relevant year. Financial statements are sent through the data box to the registry court where the company is registered – easy to find in the Public Register (apart from the fact that this information should appear on issued invoices). From this year, you can also submit financial statements through your local tax office. Submit them as an attachment to the tax return for the relevant year, and the public authorities will pass them between themselves for you. 🙂
When are financial statements valid?
To be valid, financial statements must be dated and signed by the company’s statutory representative (the managing director for an s.r.o.).
There is only one way to file financial statements: electronically in PDF format. Because you submit this document electronically, it must bear an electronic signature. If you submit financial statements without an electronic signature or with a scanned handwritten signature, the submission is treated as invalid, with a possible fine of up to 3% of assets (the asset value is shown in the balance sheet).
However, let us bring in a little reality. A large proportion of companies do not publish financial statements at all. I understand that it is uncomfortable to have people looking over your shoulder at how much you earn, what debts you have, and so on. Self-employed people have no such obligation. But if a company fails to publish its financial statements, it risks a fine of up to 3% of assets.
If the court discovers that you are not publishing financial statements, it will request the missing documents through your data box. But be careful: playing dead does not pay here, because if you ignore the requests, the court can order your company into liquidation!
In practice, fines are uncommon, and courts usually just send a request for the missing documents. Larger registry courts are less lenient, though. For example, the Prague registry court has fined several entities straight away, without any prior request.
What is an electronic signature?
An electronic signature is a form of officially verified signature, essentially an alternative to visiting an office with your ID card and signing the document in front of an official. You can arrange one through Czech Post, through the portal eIdentity or through První certifikační autorita. It is important to obtain a signature that both replaces your handwritten signature and qualifies as a valid electronic signature recognised by public authorities. Electronic signatures are generally paid for 1 year at a time and cost around CZK 500 per year.
An important benefit, besides signing, is that a document, once signed electronically, is locked and can no longer be altered. This security protects the document against fraudsters and others. An electronic signature can therefore also be useful on important contracts and documents.
Personally, I definitely recommend getting an electronic signature. Although many financial statements in the Collection of Deeds are unsigned, I see no reason to expose yourself unnecessarily to a potential fine, especially when you can use the electronic signature to secure other documents too. If you are unsure what to do, please get in touch and we can look at it together. 🙂