About Czech Republic
Last update: August 5th 2023
Learning how to start a business in Czech Republic is a guarantee to establish yourself in one of the great world economies. For this, it is important to know the business and economic characteristics that make this country an excellent option. Thus, you can have a complete picture of what awaits foreign investors who want to invest there.
In this article, we present all the variables that you can find in this foreign investment destination in Europe. Thus, you will be able to know the business and economic panorama that they have encouraged and that will continue to encourage foreign investment.
Strategic location for European markets
Business opportunities Czech Republic attract many investors who want to take advantage of them. However, when you do not have support to assist you, this task can become somewhat difficult. In addition, the nation has an excellent competitive infrastructure and a highly efficient labor force.
In the same way, the Czech Republic has an economic attraction for companies that want to expand in ECE (Central and Eastern Europe). Furthermore, in the country, direct foreign investment has had excellent success with approximately 173,000 local companies. This includes the different economic sectors that are financed by foreign capital.
Also, due to its location in the central axis of Europe, the Czech Republic is a good place to start a transport and logistics business. This is due to its proximity to the areas of greatest production and consumption. In addition, it belongs to the EU, which makes it an attractive place, so it is important to know how to start a business in Czech Republic.
In addition, its location is privileged for having the support of ECE transport networks. This is one of the most advanced transports, talking about network density worldwide. This is why it is an excellent space for suppliers and distribution centers.
Likewise, one of the achievements of the Republic is its performance during the global economic crisis. However, despite public and private modernization, the country is a difficult place to do business without advice.
Strong and Stable Economy
On how to start a business in Czech Republic, you should consider that its economy is competitive, dynamic, and innovative. In addition, it is the fourth most economically stable nation in the EU, reaching second place in positive results in the last 10 years. It is also considered one of the most economically dynamic countries. Similarly, in innovation, it occupies a privileged place among the top 25 worldwide.
The Czech Republic business culture includes a particularly strong industrial tradition in machinery, automobile, electrical, chemical, energy, and metallurgical companies. In addition, it is one of the leaders in nanotechnology.
Automotive industry
On the other hand, in the Czech Republic, the automotive industry is the most developed sector and has a high-level base of suppliers and technologies. In addition, the automotive industry in the country is a quarter of the total production for exports. This is not limited to just cars but also auto parts, engines, seat fabrics, and electrical components.
Security and defense
On the other hand, in security and defense, the nation has historical exports of arms, ammunition, and armored vehicles, among others. In addition, in the country, there are producers of aeronautical security systems, highly valued worldwide.
Medical sector
In the medical sector, the Czech Republic has industries specializing in exports of medical equipment that meet the great demand worldwide. Likewise, this industrial sector has its own research and development programs, which makes it innovative. In addition, they have the collaboration of recognized laboratories and renowned university entities.
Energetic industry
Another sector where you can think of doing business in the country is the energy industry. In this industry, the country stands out for solutions such as electric turbines or solar energy. In this sense, the nation occupies 3rd place among the producers of electrical energy worldwide.
Moreover, there are companies with innovative solutions for wastewater treatment with 3D nanotechnology. It also has mobile drinking water treatment plants.
Technology
Similarly, this country has climbed in recent years as a leader in terms of nanotechnology. Thus, they have ingeniously added this technology to anti-allergy textiles, medical aids, waterproofing, and more.
For all this and more, knowing how to start a business in Czech Republic guarantees you a place in one of the best economies.
Favorable Business Environment
When doing business in Czech Republic, it is important to take into account the business environment. This ranks 21st out of 27 in Europe. In addition, it has positive results on the subject of corporate taxes, which is 19%. Consequently, it is in the 10th lowest place in the European Union.
In addition, it is notorious in comparison with other EU countries such as Hungary, which is 9%, Malta with 25%, and France with 35%.
Apart from how to start a business in Czech Republic, it is important to highlight the good results in terms of business investment. In this sense, the country ranks 11th in terms of research and development companies. In addition, in the technology sector, the country has developers who have innovated and are leaders in this area.
Likewise, other areas related to business systems with strong activity and ample room for growth are the following:
· Electronic commerce
· Logistics
· Data centers
· Cybersecurity
· Cloud systems
· Payment systems
· Learning
In addition, digitization and the motivation of companies to grow favor even more to the technology sector. This makes it possible for the said sector to favor mergers and acquisitions activity on a sustained basis. Thus, the Czech Republic has managed to attract foreign investment from several countries, among which are:
· Germany
· USA
· Japan
· United kingdom
· Netherland
· Sweden
· Austria
· France
· Italy
Also, you will find that many family businesses are being sold, thus making it easy for investors to do so. Likewise, there are some attractive benefits that once you know how to start a business in Czech Republic you can take advantage of. Among these benefits we can highlight the following:
Membership in the European Union
Although the country has been one of the popular investment destinations since the 1980s, with its integration into the EU in 2004, this has increased. In addition, the country adjusted its laws to those of the European Union before it entered into the regional body. Thanks to this accession, the Czech Republic has free movement of capital, goods, services, and people within the member countries.
In addition, as we already mentioned, it is located in a strategic area in the very heart of Europe. This is very convenient from a logistical point of view for the entry and exit of goods.
Political stability
Since 1989, at the time known as the Velvet Revolution, the country has had political and economic stability. Evidence of this is the rapid recovery from the international financial crisis that occurred in 2008 and 2009. For this reason, experts foresee a sustained economic recovery, evidenced by the high volumes of transactions.
Favorable costs
A great benefit of establishing a business in this European country is that the labor costs are quite favorable. In this case, the Czech Republic still enjoys lower labor costs than most EU countries. Therefore, as an investor, you can benefit from the same level of skills at a lower cost.
Parity between local and foreign investors
Czech law does not distinguish between foreign and domestic companies in the sense of treatment in the areas set out in such laws. However, for the banking and defense sectors, there is a review of foreign investment projects. As for properties and real estate, foreign investors can acquire them without restrictions.
Competitiveness
Following closely the largest economies and manufacturers of the world, the Czech Republic is among the top 5 in the world. This is so thanks to the operating conditions, the competitiveness of costs, and the risk index. In general, the Czech economy is among the top 40 in the world for general competitiveness purposes.
In addition, the World Bank classifies the country as one of the destinations with very easy access to business. This is thanks to the fact that the country is an excellent recipient of Foreign Direct Investment or IDE. This includes the following features.
· Low inflation
· Modest interest rates
· Relatively stable and fully convertible currency
· Very good economic growth rate
All this, and more, provide the ideal conditions for doing business in Czech Republic.
Investment protection
One of the concerns of foreign investors is the guarantee of being able to have protection over their businesses. In the case of the Czech Republic, it belongs to MIGA, the Multilateral Investment Guarantee Agency. This is an international organization integrated into the IMF and the World Bank that guarantees the protection of investments.
Hence, this European country has bilateral treaties with countries like the United States, Germany, Norway, and Finland, among others.
Avoid double taxation
One of the tax characteristics that favor investment and business establishment is avoiding double taxation. In this case, the country has treaties to avoid dividends, royalties, and interest with various countries. Among them are all EU countries, the United States, Japan, Australia, Canada, and others.
Investor Visa
The Czech Republic, like many other countries, has an investor visa for non-EU citizens. Nevertheless, the authorities have established the following conditions:
· Create at least 20 full-time jobs for EU citizens.
· Invest at least EUR 2,850,000 (with the possibility that up to 60% is in tangible and non-tangible assets.
Skilled Workforce Driving Innovation
Part of how to start a business in Czech Republic is finding a skilled workforce to start and grow a business. However, this can be a bit difficult due to the lack of training and the digitization of operations. Despite this, in the country, you can find professionals with the best capacities to innovate.
The professionals you will find in the country are mostly specialized in the areas of technology and engineering. Furthermore, companies generally have no problem finding workers with the necessary qualifications in all areas. The country also has one of the lowest unemployment rates in Europe, with only 2.6% (2023).
Attracting Foreign Investment
The Czech Republic since its inception has wanted to attract foreign investment through the implementation of a liberal policy. This has made it possible to strengthen its economy thanks to said policy, with continuous and favorable reviews. This has also made it possible to transcend towards the free market with the increase in foreign investment per capita.
Thus, after having entered the EU, the authorities established the free movement of capital and free establishment. However, in 2021 the country establishes a law to control foreign investment. In this case, it seeks to strengthen supervision and control over investments, a point to consider on how to start a business in the Czech Republic.
Also, you would need a permit on a mandatory basis and will be under supervision in case of investment in certain sectors. In this way, the sectors that are under this process, among others, would be:
· Infrastructures
· Information Systems
· Critical or Essential Technologies
· Energy
· Defending
· Dual Use Technology
In all these cases, you must notify in advance and wait for authorization from the Ministry of Industry and Commerce. Similarly, the authorities grant final permission for tax incentives to foreign investment.
On the other hand, as far as the real estate sector is concerned, the government allows any foreigner to hold the property title. Therefore, regardless of your nationality or place of residence, if you are a natural or legal person, you can be the owner of any real estate property. This also includes movable property, developable, forest, or rustic land.
Some financial incentives
As part of how to start a business in Czech Republic, you should know that you will find other substantial benefits. For example, the authorities do not impose restrictions on the repatriation of capital, nor do they impose exchange controls. In the same way, the investment incentives law favors those who create jobs with added value.
In this case, it refers to those who establish projects with jobs with salaries above the average for the region. It also includes those who promote research through researchers or collaborations with research organizations.
Therefore, it is important to know how to start a business in Czech Republic for the reasons stated in this article. In this way, if you are an investor who wants to bet on a stable and growing economy, this European country is a more than appropriate option.
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