Fact Sheets

The following document provides detailed information about the Czech Republic, such as its investment climate, investment opportunities, description of the labour market, educational system, system of taxation or procedures of setting up a business. Potential investors also find information on how to relocate their business to the Czech Republic, the situation in the property market, transport infrastructure or description of the customs system.

1. Investment Climate

The Czech Republic is a fully-fledged parliamentary democracy and is one of the faster growing economies as well as one of the ten countries that entered the European Union on 1 May 2004. The country’s economic policy is consistent and predictable.  A strong and independent central bank (the Czech National Bank) has maintained an extraordinary degree of currency stability since 1991. The Czech koruna is fully convertible. All international transfers (e.g. profits and royalties) related to an investment can be carried out freely and without delay.The Czech Republic is a member of the Multilateral Investment Guarantee Agency (MIGA), an international organization for protection of investments, which is part of the World Bank-IMF group.

2. Inflow of FDI

The Czech Republic is one of the most successful transition economies in terms of attracting foreign direct investment. The introduction of investment incentives in 1998 has stimulated a massive inflow of FDI into both greenfield and brownfield projects and since 1993 more than EUR 100 billion in FDI has been recorded.

3. Investment Incetives

Investment incentives are available not only to investors launching or expanding production, but also to technology centres and business support services centres. Thanks to the amendment to the Investment Incentives Act that came into force on 1 May 2015, investors can now apply for more types of investment incentives.

4. Other Financial Support Programmes

Investment incentives are available not only to investors launching or expanding production, but also to technology centres and business support services centres. Thanks to the amendment to the Investment Incentives Act that came into force on 1 May 2015, investors can now apply for more types of investment incentives.

5. Basic Data on the Czech Republic

The Czech Republic covers the area of 78,864 km2. In 2017, its population reached 10.65 million and the labour force 5.4 million people. The official language is Czech, the capital of the CR is Prague, and the official currency is the Czech koruna (crown, CZK). State system is a multi-party parliamentary representative democracy, with the Prime Minister as the head of government. The Parliament is bicameral, with the Chamber of Deputies (200 members) and the Senate (81 members) . As a democratic country, it’s a member of many international organizations such as United Nations, EU , NATO and many more.

6. Labour Market

The Czech Republic has the lowest unemployment rate in the European Union. Despite that, one can still find suitable workers among the country’s unemployed and economically inactive people. All that is needed is to create more suitable conditions for them (most importantly part-time work, greater flexibility, retraining and/or education following recruitment). In reality, there are many more people available for recruitment on the market than the employment figures would suggest.

7. Labour Regulations

Employment contracts must be concluded in writing with the following minimum mandatory content: (i) place of work, (ii) starting date of employment and (iii) type of the work. Employees have to be informed in writing about their duties and rights, such as holiday entitlement, wage and payment dates, working hours, job description, notice period, information about collective agreements, etc., within one month after concluding an employment contract if such information is not stated in the contract.

8. Education System

The Czech Republic combines an outstanding level of general education with strong science and engineering disciplines. For generations the Czech education system has generated high-level, technical problem-solving skills in environments where standard solutions are inadequate. School attendance is compulsory from ages 6 to 15 (elementary and lower secondary school). After nine years, students may continue at three basic types of upper secondary school: vocational training centres, secondary schools and high schools (gymnazium). Undergraduate and graduate studies are offered by colleges (offering three to four-year bachelor programmes) and universities, which also offer master and doctoral programmes.

9. Technical Education

For many years the former Czechoslovakia produced the highest percentage of science and technical graduates in the world. This tradition continues in the Czech Republic: in 2008 the proportion of university degrees awarded in sciencerelated fields (engineering, manufacturing and construction) was among the highest in Europe. The government is committed to sustaining this by maintaining or increasing funding in these areas.

10. R&D in the Czech Republic

The Czech Republic is home to a motivated workforce with a high degree of responsiveness to training and interest in continual professional and personal growth. The Czech Republic is already recognized as a prime location for European services-sector expansion and hosts an increasing number of business-support, research and customer-oriented services including expert solution centers, data processing and call centers as well as regional headquarters, valueadded distribution centers and technology parks. Employment in high-tech services and manufacturing is also very prominent in the Czech Republic, providing input for the innovation activities of other firms in all sectors of the economy.

11. Taxation

The system of taxation described below is derived from the Czech tax legislation effective on 1 January 2019. The legislation is subject to frequent amendments and changes. Taxpayers in the Czech Republic are subject to the following taxes in 2019: Corporate income tax, Personal income tax, Value added tax (VAT), Excise tax, Road tax, Real estate tax, Real estate acquisition tax, Flat tax and Energy tax.

12. Corporate Tax and Depreciation

Corporate income tax is levied on income from the worldwide operations of Czech tax residents and on Czech-source income of Czech tax non-residents. Czech tax residents are considered to be entities with their registered office or place of effective management in the Czech Republic. The standard rate of corporate income tax is 19%. For basic investment funds special 5% corporate income tax rate applies; for pension funds 0% corporate income tax rate applies.

13. Custom System

Since the Czech Republic does not have any borders with non-EU member states, the routine customs checks of goods transferred across the Czech border for customs and taxation purposes are usually conducted at international airports. Note that these checks do not apply to flights between airports within the EU territory. Customs procedures apply to goods moved from/to non-EU member states. The customs procedures are stipulated mainly by EU customs regulations.

14. Transport Infrastructure

The Czech Republic possesses one of the most advanced transport networks in Central and Eastern Europe. Its geographical position at the very centre of Europe makes it a natural crossroads for major transit corridors. An extensive network of transport routes serves not only the Czech Republic but also links the country to neighbouring and other European states, and the density of the transport network ranks the Czech Republic among the world’s most advanced countries.

15. Telecommunications

On 1 May 2005 the new Act on Electronic Communications came into force, by which the Czech Republic implemented the regulatory framework of the European Union from 2002. The electronic-communications sector in the Czech Republic has been fully liberalized. Every natural person or legal entity that fulfils the conditions stipulated by law can enter the market and provide electronic-communications services or operate a public communications network. No exclusive rights exist in the area of electronic communications. In comparison with other member states of the European Union, the Czech Republic has above-average rates of mobilesubscriber density.

16. Property Market

The Czech Republic investment market performed well in 2018, boosted by sales of assets such as CTP Portfolio or Forum Nová Karolína, with the investment volume totalling EUR 2.6 bln. Strong demand across all investment sectors continued from 2017. We monitored four individual transactions with a volume of above EUR 100 mln and a combined value of EUR 0.9 bln which accounted for approximately 34% of total investment volume. n 2018, the office sector dominated with approximately 36% share of total investment volume, followed by the retail sector (29% share) and the industrial sector (21% share).

17. Building Process

Building a new plant in the Czech Republic is a similar procedure as in other European countries. The Czech Republic offers an effective planning process and rapid construction capabilities. In most cases, it takes between one to two years to go from a completely vacant greenfield site to completion of a new facility. This time span can be shortened in municipal industrial zones, where land plots and infrastructure are already prepared and local officials have been trained by CzechInvest to effectively support investors.

18. Utilities

On 1 January 2006, the Czech electricity market was fully liberalised; households as the last customer segment became eligible customers and won the right to select their supplier. It is typical of the Czech open electricity market that there is no longer any regulation of activities in which competition is not feasible. The liberalisation of the Czech gas market, started in 2005, was completed at the end of 2006. Under the Energy Act, on 1 January 2007 all natural gas customers got the chance to choose their supplier. The Czech Republic buys most of its natural gas from Russia and Norway and therefore the Czech Republic is not 100 percent dependent on supplies from Russia, as is the case with many other states of Central and Eastern Europe.

19. Regions of the Czech Republic

The Czech Republic is divided into 14 regions (Higher Territorial Self-governing Units), which came into effect on 1st January 2000. The Basic Territorial Self-governing Unit is the municipality. In the Czech Republic there are three categories of municipalities. These categories differ in the range of selected competencies that have been transferred from the central government. CzechInvest is present in all regional capitals of the Czech Republic. The raison d’être of the inland network is to provide CzechInvest‘s services directly in the localities where companies are based with further knowledge of the local life and institutions.

20. Setting up a Business

Foreign legal entities are allowed to conduct trade activities, including the acquisition of real estate, under the same conditions and to the same extent as Czech entrepreneurs. They may become founders or co-founders of a company, or may join an existing Czech company. Foreign companies may operate in the Czech Republic either by establishing a branch office registered in the Czech Republic or by establishing a Czech company. There are four different legal forms of companies; the most common are limited liability companies (s.r.o.) and joint-stock companies (a.s.). The other forms – a limited partnership (k.s.) and a general commercial partnership (v.o.s.) – are sometimes used for tax reasons (in most cases by investors from German-speaking countries).

21. Relocating to the Czech Republic

The conditions applying to a foreign national’s entry to the Czech Republic and its long stay in the country are set by Act No. 326/1999 Coll., on the residence of foreign citizens in the Czech Republic, as amended. By signing the Schengen Agreement in 2004, the Czech Republic applies common rules concerning the movement of persons in the entire Schengen area, including the conditions for crossing external borders since December 2007.

22. Life in the Czech Republic

The Czech Republic ranks 27th of 63 countries in the worldwide quality-of-life index and has the best result among the countries of Central and Eastern European. Prague and all larger cities in the CR boast a wide range of rented furnished and unfurnished housing for expatriates and their families, ranging from centrally-located apartments to spacious villas in leafy suburbs. Many real estate agencies offer relocation services for a charge of one to two months’ rent. The Czech healthcare system is inspired by the European tradition, founded on public services and financed by predominantly public means. Czech physicians are at least of the same quality as in Western European countries. Public transport in the Czech Republic is comprehensive, efficient and very reasonably priced compared to Western Europe. Large towns all boast excellent local networks. Prague and many cities in the Czech Republic are famous for their architectural heritage (see, e.g., the UNESCO World Heritage List at whc.unesco.org/en/list, which includes 12 places in the Czech Republic), museums, theatres, cinemas, galleries, historic gardens and cafes.

23. CzechInvest Services and Useful Contacts

CzechInvest promotes the Czech Republic abroad as a suitable destination for investments. It is the exclusive organization that may submit applications for investment incentives to the governing bodies. The agency also supports Czech firms that are interested in becoming involved in the supply chains of multinational companies. Through its services and development programs, CzechInvest contributes to the development of domestic firms, Czech and foreign investors and the business environment as a whole.
Here you can find useful contact information for organizations and institutions like Czech ministeries, CzechTrade, Czech National Bank, Prague Stock Exchange, The Czech Private Equity and Venture Capital Association, Confederation of Industry of the Czech Republic, Association of Czech Entrepreneurs, Association for Foreign Investment and many more…