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Czech Republic profile
As one of the most stable markets in Central Europe, the Czech Republic ranked extremely well with high levels of FDI and trade policy making it an attractive trade ally. Having batted off the financial crisis in comparison to neighbouring nations, following the German example, the only periods of recession were marginally witnessed in 2012 and 2013. However, 2015 hopes to show a 3.3% growth, removing any concerns of a lull in the markets strength.
The GDP per head is roughly $18,608 making it one of the highest in the Central European region. Direct investment from abroad and domestic consumer activity is driving an incredibly powerful market at the moment, with around 80% of Czech trade coming from within Europe itself. The Czech Republic has rallied well since its post-Union future was confirmed, and today a huge part of the private sector is a financial driver within the country. With one of the best infrastructure networks in the whole region, the Czech Republic is incredibly popular as a place to live and work for its fine balance of lifestyle quality and rules.
Having brought in as much as $125 billion USD in foreign investment stocks in 2011, the country performs extremely well on the foreign markets. It receives more FDI than any other nation in Central or Eastern Europe, and in the overall terms falls just behind countries like Poland in the rankings. Because of the fairly quick judicial process and in general comfortable atmosphere for foreign investment, Czech is a brilliant base of operations for foreign nations to set up.
The Challenges Ahead
While the positive news about Czech finances is a huge short in the arm for a flagging European economy, today the growth of the Eurozone markets poses a challenge in the future. A reduction in state spending is not too far around the corner, which could affect both health & pensions.
In October 2013, the Social Democrats took the seating with roughly 20.5% of the vote. They were the majority and are a right-of-center party. Their main competition comes from Andrej Babis, a wealth investor who heads the ANO party and wants to make sweeping reforms to Czech politics. Predictions of a new government that uses the best of each party is underway so that the Czech’ positive recent history does not need to become stunted in internal strife from cabinet.
The Czech Republic is amongst the most secure and thriving markets in central Europe. The private sector represents around 80% of Gross Domestic Product (GDP). Gross domestic income per capita is currently around Euro 25, 300 one of the best in Central and Eastern Europe (CEE).
Plenty of leading International companies are present in the Czech Republic they vary from large investors to smaller companies, a lot of leading companies run their central and eastern European operations from Prague.
Advantages for International businesses exporting to the Czech Republic include:
English widely spoken
Business culture similar to Western Europe
The location provides easy access into CEE and Russian markets
Western products well received
Less than 2 hours flight from most major European capitals
Strong points of the Czech market include:
European Union (EU) membership ensures no major restrictions to doing business
Some of the best infrastructure in central Europe
32 billion euro worth of EU structural funds available for 2014 to 2020
As a member of the EU you will discover no major constraints on import and export. Difficulties when doing business in the Czech Republic include:
Slow judicial process
Lack of transparency in public procurement
The Czech economy has recovered from the economic crisis. Change was influenced primarily by investment and exports. After shrinking by 0.9% in 2013, GDP grew by 2.3% in 2014 (estimate). The Czech National Bank has predicted growth of 2.5% in 2015.
The major challenges of the overall economy over the upcoming years will be:
Slow growth in Eurozone markets
Restricted state spending to stay in line with the EU’s 3% of GDP deficit targets
Structural reform, especially in the health and pension sectors
The Czech Republic is a member of the European Union (EU) and the World Trade Organization (WTO). Goods manufactured within the EU are exempt from import duties.
Contact the CeSport team should you have market accessibility difficulties associated with the operation of the Single Market.
High Growth Europe
The Czech Republic is part of ‘emerging Europe’ region in central and Eastern Europe. It is a gateway to the 100 million consumers in these markets.
The region provides various opportunities, especially in 8 main sectors:
Security and Defence
Medical and health products
Sports, leisure and tourist products and equipment
EU structural funds
The EU has allotted EUR 23 billion to the Czech Republic via the structural and cohesion fund program. This helps sustain the Czech Republic as a market offering growth, stability and good prospects for EU, US and Asian business. The EU funds will promote investment in:
Environmental and technology projects
Innovation and competitiveness
Research and development
30% of the EUR 23 billion the Czech Republic receives in EU structural funding for projects (2014 to 2020) will be given to infrastructure projects, primarily to transport.
Start-up things to consider
Company regulation is governed by the Czech Civil Code.
The Czech Civil Code recognizes the following types of companies:
Limited liability Company
General commercial partnership
A company has legal status and will have to be registered in the Commercial Register at the Ministry of Justice.
Overseas companies often set up a branch with the capital Prague and Brno the 2nd largest city popular locations in the Czech Republic in the Czech Republic. A branch is not a legal entity, but has to be recorded in the Commercial Register. A branch is subject to tax on the same basis as a company.
The Commercial Code regulates the status and activities of both legal entities and individuals. An entrepreneur is an individual engaged in business activity on the basis of a trade certificate.
Direct sales into the Czech market can be hard. For most Oversea companies it‘s more efficient to target the market through local business partners such as a distributor.
Commission agents are not so typical and can be a challenge to identify.
The Czech legal system is principally harmonized with EU requirements.
Contact CeSport to help find tax and legal advisers before entering into agreements.
Standards and technical regulations
Products and packaging should meet EU standards.
The local product law may vary.
Labeling should be all in Czech. You should seek advice from the appropriate registration or certification authority on the extent to which labeling should adhere to Czech domestic legislation on advertising and health and safety.
The Czech Standards, Metrology and Testing Authority have responsibility for standards and technical regulations.
Intellectual Property (IP)
Trademarks, designs, patents and copyright are the principal forms of IP protection accessible to companies and individuals.
The Industrial Property Office has responsibility for IP in the Czech Republic.
Tax and customs considerations
A double taxation agreement is in place between the UK and the Czech Republic.
Value Added Tax (VAT)
The Czech acronym for VAT is DPH. The following VAT rates apply:
21% standard VAT rate applies to most services and products
15% reduced VAT rate is applicable only to specific products and services
10% on books and medicines
Excise duties are payable on hydrocarbon fuels, spirits, wine, beer and tobacco products. Environmental taxes apply to gas, electricity and solid fuels.
The personal income tax rate is 15%.
The standard corporate tax rate for a Czech resident company is 19%.
The internal market of the EU is a single market, which allows the free movement of goods and services. Consequently, no import duties are applicable.
Testing may be compulsory for some imported goods, especially technical and electrical equipment.
Full name: Czech Republic
Population: 10.6 million (UN, 2012)
Area: 78,866 sq km (30,450 sq miles)
Major language: Czech
Major religion: Christianity
Life expectancy: 75 years (men), 81 years (women) (UN)
Monetary unit: 1 koruna (Kc) = 100 halers
Main exports: Manufactured goods, machinery, cars and transport equipment, beer
GNI per capita: US $18,700 (World Bank, 2011)
Internet domain: .cz
International dialling code: +420