When Are Czech Companies Required to Publish Their Financial Statements?

All companies registered in the public register of the Czech Republic, as well as those required to do so by special regulations, must publish their financial statements. However, half of the businesses subject to this obligation fail to comply.

Currently, all companies listed in the Czech Republic’s commercial register are required to publish their financial statements. The country has around 600,000 registered companies, yet more than half have consistently ignored this requirement. According to a report by the Czech Credit Bureau, only 260,000 companies published their financial statements for 2023—just 44% of those legally required to do so. Additionally, some Czech companies delay publication for several years.

The law stipulates that the responsibility for publishing financial statements falls on organizations listed in the public register or those mandated by special regulations. Depending on the specific requirements, legal entities or individuals must publish either full or abbreviated financial statements (for double-entry bookkeeping) or a summary of assets and liabilities (for simple bookkeeping).

“Audited organizations must publish their financial statements along with the annual report in the audited scope, as well as the auditor’s report,” says Ivan Brož, auditor and partner at the consulting firm Rödl & Partner.

Who Must Disclose What

The amount of information that must be disclosed largely depends on the size of the accounting organization, which refers to any individual or entity maintaining accounting records.

At one end of the spectrum are the smallest entities, known as micro accounting organizations, which are only required to disclose an abridged balance sheet and income statement, along with a minimal appendix.

At the other end are large companies, which must publish a balance sheet, income statement, notes to the financial statements, a statement of cash flows, and a statement of changes in equity, as required by law.

The scope of disclosure also depends on whether the entity is classified as a company and whether its financial statements require auditing. Additionally, companies subject to mandatory audits must prepare and publish an annual report.

“Small and micro-entities that are not required to have their financial statements audited are legally exempt from publishing a profit and loss statement unless required under special legal provisions,” added Ivan Brož.

Categorization of Accounting Units by Size

The scope of mandatory financial disclosures primarily depends on the size and type of the company. Based on size, accounting units are categorized as follows:

• Micro Accounting Units: These entities have assets up to CZK 9 million, an annual turnover up to CZK 18 million, and an average of up to 10 employees (meeting at least two of these criteria on the balance sheet date is sufficient). They are only required to publish an abridged balance sheet, income statement, and a minimal appendix, unless their financial statements are subject to an audit.
  
• Small Enterprises: These entities have assets up to CZK 100 million, an annual turnover up to CZK 200 million, and an average of up to 50 employees (exceeding micro-level but meeting at least two of these criteria on the balance sheet date). They must publish a balance sheet, an abridged income statement, and a minimal appendix, unless an audit is required.
  
• Medium-Sized Enterprises: These entities have assets up to CZK 500 million, an annual turnover up to CZK 1 billion, and an average of up to 250 employees (exceeding small-enterprise criteria but meeting at least two of these thresholds). They are required to disclose a balance sheet, a profit and loss account, notes to the financial statements, a cash flow statement, and a statement of changes in equity.
  
• Large Organizations: Companies that exceed at least two of the criteria for medium-sized enterprises are classified as large organizations. They must publish all of the above financial statements in full.
  
• Public Interest Organizations and Selected Entities: These entities are always considered large organizations and must comply with the same disclosure requirements.

Petr Slavíček, BDO Managing Partner for Audit and Assurance Services, highlights that controlling entities must also disclose consolidated financial statements, depending on their size.

“If they belong to a so-called supreme consolidating entity that publishes consolidated financial statements anywhere in the European Union, they are exempt from preparing their own consolidated statements. However, they are still required to disclose financial information in the Czech Republic,” Slavíček emphasizes. He adds that many Czech accounting entities are unaware of this requirement and therefore fail to comply.

Summary: Accounting Unit Categories and Disclosure Requirements

How to Publish Financial Statements

Publishing financial statements involves submitting them to the collection of documents at the court where the company is registered. Once submitted, the financial statements become publicly accessible, ensuring transparency in management. This can be done through several methods:

• Electronic data box
• Email with an electronic signature
• Online submission via the Justice.cz portal
• Through the tax administrator as an attachment to the tax return

For individual accounting units, the procedure is determined by a special regulation.

“Selected accounting units, with the exception of health insurance companies, submit their financial statements to the Central State Accounting Information System (CSÚIS),” explains Petr Slavíček.

He adds: “Financial statements, along with budgetary and accounting information from all levels of state and local government, are also available to the public. They are published on a specialized information portal of the Ministry of Finance of the Czech Republic (MF ČR), the so-called ‘State Treasury Monitor.’ The provided information, which is updated quarterly, comes from the Integrated Information System of the State Treasury (IISSP) and the **Central Accounting Information System (CSÚIS).”

Fines Not Yet Issued

Failure to disclose financial statements (and, if required, the annual report) may result in fines of up to 3% of the company’s assets or CZK 100,000. These fines can be imposed by the registration court or the tax administrator.

For issuers of securities traded on the stock exchange, the Czech National Bank may impose fines of up to CZK 300 million or 5% of the issuer’s total annual turnover. If the issuer has illegally obtained a material benefit, the fine may be twice the amount of the benefit if it exceeds the previously mentioned limits.

Despite the high potential fines, they are rarely enforced, according to Petr Slavíček. “For issuers, it’s hard to imagine them failing to meet their disclosure obligations. And for other accounting entities? ‘Where there’s no prosecutor, there’s no judge,’” he remarks.

“But living with the long-term risk that someone could file a complaint with the registration court for missing financial statements—leading to a fine—is probably not something most people would want,” he adds.

P.S. If you need assistance with financial statement preparation and disclosure in the Czech Republic, our experts at 360WEDO are here to help. With years of experience and a deep understanding of legal requirements, we ensure your company meets all reporting obligations accurately and on time. Our team can also manage your accounting on an outsourced basis, guaranteeing compliance and minimizing risks. Leave a request on our website, and we will get back to you.

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