Country GuideCzech Republic

From Global Connections

The Czech Republic has been extremely successful at attracting foreign direct investment (FDI) in recent years. Over 173,000 Czech firms across all sectors are now supported by foreign capital. According to the Czech National Bank, a total amount of EUR77.8 billion worth of FDI has been recorded since 1993.

The Czech Republic ranked 36th in the World Bank's 2016 Doing Business rankings, falling three places from 33rd in 2015. The country's strengths lay in the Trading Across Borders category where it ranked first in the world in both the 2015 and 2016 rankings. Conversely, the rankings identified the country's weaknesses in Dealing with Construction Permits and Paying Taxes, where it ranked 127th and 122nd, respectively.

Key facts about starting a business in the Czech Republic:

  • It takes approximately eight days and 15 procedures to start a new business in the Czech Republic; this process is detailed in the Doing Business in chapter
  • Generally, Czech legal entities can only employ foreigners if the vacancy cannot be occupied with a Czech national; employment regulations are discussed in detail in the Labour chapter
  • The Czech Republic was ranked 16th in a comparison of 36 countries' intellectual property systems that assesses cost, speed, quality of judges/tribunals, quality of advice and the fairness and predictability of decisions; intellectual property rights are discussed in the Legal overview chapter
  • Companies applying for a listing on the Prague Stock Exchange must have, amongst other requirements, published audited accounts for at least three years; this is discussed further in the Finance chapter

While establishing a business and investing in the Czech Republic is a transparent and straightforward process, it is important to understand the nuances of any local regime. The manner in which people conduct business in the Czech Republic may differ from the home countries of investors. Furthermore, variations on these distinctions may exist in different regions of the Czech Republic and the industry in which a company operates.

Czech is the official language of The Czech Republic. However, much of the population is multilingual and therefore business may also be conducted in English or German.

Business is hierarchical and status is important. Business attire is typically conservative; nevertheless, this will vary according to industry and smaller companies may have a more casual dress code.

Punctuality is critical in the Czech Republic. A handshake is the typical greeting for a new introduction and business cards will be exchanged after initial introductions.

Those looking to establish a business in the Czech Republic will often look to countries across Europe as alternative options. While membership of the EU ensures parity in many aspects of the legal,tax and audit regimes, the Czech Republic can be differentiated on the following factors:

  • Strategically located in the centre of Europe with access to established western and emerging eastern markets
  • Well educated, skilled and multi-lingual workforce; 72 per cent of Czechs aged 18 to 59 speak at least one foreign language
  • The government offers incentives such as income tax relief for investors for up to 10 years, for those operating in certain industries; further discussed in the Trade chapter
  • The Czech Republic is a recipient of GBP23 billion worth of EU structural funds for 2014 to 2020
  • The Czech Republic possesses one of the most advanced transport networks in Central and Eastern Europe; further details in the Infrastructure chapter

Despite the many benefits of investing in the Czech Republic, foreign investors should remain aware of potential challenges. Despite efforts to diversify, the country is highly dependent on exports to EU member countries, making it vulnerable to economic swings in the EU. The country also suffers from a slow pace of judicial and regulatory reforms.

This guide has been developed to provide businesses with an overview of the Czech Republic, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in the Czech Republic. However, the information contained in this document is generic in nature and you should not act or rely on it without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 Register of Economic Entities
2 Financial Administration
3 The Office for Personal Data Protection
4 Ministry of Foreign Affairs
5 Industrial Property Office
6 Czech Invest
7 Ministry of Labour and Social Affairs

 

Sources

1 FDI Statistics
2 Doing Business Rankings
3 IP Index
4 Foreign language statistics
5 Structural Funds

 

Download Country Guide - Czech Republic (1.04MB, PDF)

Disclaimer

This document is issued by HSBC Bank plc, Czech Republic Branch (the Bank). This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.

Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton International Ltd (GTIL) and its member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. This publication has been prepared only as a guide. No responsibility can be accepted by GTIL for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.

HSBC retains all responsibility for the translation of the content of this guide. In the event of any discrepancy or inconsistency between the English and translated versions of this Guide, the English version shall apply and prevail.

You are leaving the HSBC Commercial Banking website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.

You are leaving the HSBC CMB website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.