The international business community’s perception of the Czech Republic, however, may slightly differ. Granted, the same attributes that influence the above-mentioned perceptions, like commitment, competence and competitiveness, are prevalent, but manifest themselves differently.

Increasingly, the Czech Republic, which joined the European Union in 2004, is recognized as the optimal business environment from which to better serve international customers. This is a result of several factors, the most notable being the sustained enhancements to the business environment implemented by the Czech government and the ability of the country’s pre-eminent natural resource, intellectual capital, to respond to the needs of knowledge-based and innovation-driven businesses.

The Czech Republic was the first CEE country to be admitted into the OECD. The country is a member of NATO and is fully integrated into other international organisations such as the WTO, IMF and EBRD.

*text copied from the CzechInvest Agency´s website, About the Czech Republic

Area	78,870 km²
Population	10.6 million
Workforce	5.4 million
Capital	Prague
Language	Czech
Currency	Czech crown (CZK)
Time zone	GMT +1, daylight saving time GMT +2

Source: Czech Statistical Office, 2019

 

Main Economic Indicators	2016	2017	2018	2019*	2020*
GDP growth (constant prices,%)	2.5	4.4	2.9	2.4	2.4
General government debt (% GDP)	36.8	34.7	32.7	31.5	n/a
Long-term interest rates (YTM of 10Y government bonds)	0.40	1.03	2.03	2.20	2.40
Average inflation rate (%)	0.7	2.5	2.1	2.3	1.6
Labour productivity (increase in %)	0.8	2.8	1.3	2.0	2.3
Unemployment rate (avg., %)	4.0	2.9	2.2	2.2	2.2
Average nominal gross wage (increase in %)	4.4	6.2	8.1	7.3	5.7
Average nominal monthly gross wage ( CZK )	27,764	29,496	31,885	34,200	36,200
Average nominal monthly gross wage ( USD )	1,136	1,261	1,467	1,527	1,645
Average nominal monthly gross wage ( EUR )	1,027	1,120	1,243	1,341	1,442
Exchange rate - CZK/USD (avg.)	24.43	23.39	21.74	22.40	22.00
Exchange rate - CZK/EUR (avg.)	27.03	26.33	25.65	25.50	25.10

Source: Macroeconomic Forecast of Ministry of Finance, April 2019
Note: * = Forecast

Setting up a business in the Czech Republic

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 trade name of the company must be unique. You can find more information on setting up a business in the Czech Republic in the attachments.

Visa issues are another hot topic for foreign investors. The conditions applying to a foreign citizen's entry to the Czech Republic and their residence in the country are governed by Act No. 326/1999 Coll., on Residence of Foreign Citizens in the Czech Republic, as amended. For detailed, yet reader-friendly information on both short- and long-term visas and work permits for citizens of the EU as well as non-EU countries click here.

Once your final decision to start doing business in the Czech Republic has been made, there are a lot of specific issues your company has to deal with. Investors are then advised to contact the Association for Foreign Investment. Thanks to comprehensive knowledge of the Czech investment environment, consultancy companies associated within the AFI are able to provide a broad range of professional services in all phases of investment projects, including legal consulting, real estate consulting, environmental advisory services, financial advisory services, corporate financing, auditing, tax advisory services, human-resources consulting and recruitment, etc.

Taxation system

The current tax system in the Czech Republic was established in 1993. Taxes are divided into 3 basic groups - direct taxes, indirect taxes and other taxes. Since EU accession on 1 May 2004, the system has undergone a continuous process of harmonization with European legislation. The Czech Republic also has a broad network of double taxation treaties with both EU and non-EU countries. These double taxation treaties are based mainly on the OECD Model Tax Convention.

• Personal income and corporate income taxes governed by the Czech Income Taxes Act
• Property taxes governed by the Czech Real Estate Tax Act and Act on Road Tax
• Transfer taxes governed by the Czech Act on Real Estate Acquisition Tax.

 Indirect taxes include:

• Value added tax governed by the Czech Act on VAT
• Excise tax governed by the Czech Act on Excise Taxes
• Customs duties governed by the Czech Customs Duty Act
• Ecological taxes, governed by a special Law on taxes from energy sources.

Other taxes consist of mandatory contributions into the Czech social security and public health insurance systems, governed by a variety of Czech Laws, and municipality fees, usually governed by local by-laws.

Infrastructure in the Czech Republic

Transport

An extensive network of transport routes serves not only the Czech Republic but also links the country to neighboring and other European countries. The density of its transport network places the Czech Republic among the world’s most advanced countries in terms of transport infrastructure. The significance of the Czech Republic as a transit hub has grown since the country became a member of the EU Single Market, which currently covers an area of 28 nations in Europe with more than 500 million customers in total.

• Direct highway connections to Germany, Poland and Slovakia
• One of the densest railway networks in Europe
• Direct flights to most European cities; four direct routes to Asia (Beijing, Shanghai, Cheng-du and Seoul) and three to North America (Montreal, Toronto and New York)

Energy

Electricity in the Czech Republic is provided via 5,610 km of power lines. ČEPS is the sole Czech transmission system operator and holds an exclusive license granted by the Energy Regulatory Office. The ČEPS backbone transmission system carries 220kV high-voltage power and 400kV extra-high-voltage power and uses 50 Hz frequency. Transmission towers are designed to withstand extreme weather conditions, such as icing and violent storms.

The Czech Republic is reducing its dependence on highly polluting low-grade brown coal as a source of energy. Nuclear power currently covers roughly 30% of the country’s total energy needs. The Czech Republic’s open electricity market is no longer subject to any regulation of activities in which competition is not feasible. Only activities of a monopolistic nature continue to be regulated.

The sole operator of the Czech gas transmission system is NET4GAS, which operates more than 3,800 km of pipelines. The Czech gas market has been fully liberalized. Since 1 January 2007, all natural gas customers have been able to choose their supplier. In terms of gas reserves, the Czech Republic is among the countries with the highest gas-supply security in the EU.

Telecommunications

The Czech Republic has a rapidly modernising communications infrastructure. The electronic-communications sector in the Czech Republic has been fully liberalized. No exclusive rights exist in the area of electronic communications and the level of the competition environment is adequate in European Union terms. The Czech telecommunications market is one of the most highly developed and most liberalized in Central and Eastern Europe.

The number of users of high-speed internet access is rapidly and constantly growing, and prices of high-speed internet access are falling. Companies are gradually starting to prepare their networks for implementation of the Internet of Things into their services. According to the Akamai State of the Internet Connectivity Report for Q1 2017, the Czech Republic ranks ahead of the United Kingdom, Germany, Slovakia, Poland, Hungary and many more countries in terms of average internet speed.

For more information regarding starting a business, managing business, expanding to the Czech Republic or simply want to know about trade and business events in the Czech Republic, please, visit the BusinessInfo website. You can also contact our Trade and Commercial Section on commerce_taipei@mzv.cz. 

*text copied from the CzechInvest Agency´s website, Doing Business in the Czech Republic