The Czech Republic realizes that enterprise is one of the sources of creating the values and wealth of a society. Therefore it works systematically to create and improve a proper, simple, transparent and non-discriminatory business environment, including the environment for foreign investment, which has become an inseparable and essential part of the global economy.
Protection of Foreign Investment
Promotion of foreign investment is reflected in legal rules concerning investment incentives which are based on European legislation and which allow support for specified types of investment e.g. by Income Tax credit, transfer of technically equipped territory and land at lower prices, and material support for job creation and employee re-training.
Because the Czech Republic allows foreign investors to make indirect investments, i.e. by means of capital interest in Czech corporations, as well as direct investments through their own companies or organisational components, the proper protection has to be ensured for the investment of foreign entities.
It is natural that, besides creating favourable conditions, the Czech Republic also ensures the fair, equal and just treatment of foreign investors, grants them full legal security and protects them against interference and restriction of their ownership. These valid and enforceable obligations of the Czech Republic towards foreign investors follow mainly from bilateral agreements for the protection and promotion of investment that the Czech Republic has concluded with almost 80 countries.
The Czech Republic’s entry into the European Union has greatly improved the enforceability of the rights and claims of foreign investors because European legislation has become directly applicable on Czech territory and binding for State bodies as well as private entities. The Czech legal environment has thus become accessible, but primarily has been aligned with the legal environment of the other EU Member States. Investors can rely on harmonised legal institutes and the identical legal rules they had known before only from their home countries or other Member States.
The legal regulations of investment protection and promotion in the form of international agreements are thus currently complemented with harmonised legal regulations concerning debt recovery, harmonised rules for determining jurisdiction, simplified procedures for official documents’ delivery and evidence proceedings and harmonised rules of European bankruptcy proceedings. This legal “dualism“ of international and European law is combined with a quickly Europeanising Czech legislation.
Debt recovery within the single market
Without exaggerating, it can be stated that cross-border debt collection within the framework of European Union Member States has never been simpler in the past than it is today. The free movement of persons, goods, services and capital has been complemented with the free movement of court decisions and official documents. Direct communication between judiciaries, the possibility to make submissions and submit applications and documents in several European languages and, primarily, the simplification of the legal rules of debt recovery and enforcement of rights has brought European national judicatures closer to creditors – investors.
The Czech Republic has thus joined countries that have removed borders years ago in the area of the “transferability“ of rulings made by their own judicial bodies. Henceforth, the Czech Republic treats rulings made by Courts e.g. in Italy, France, Germany and other EU Member States as its own, and the same applies in the opposite direction, a Czech ruling is equal to any decision issued by a Court of another Member State.
The fact that a decision issued in a Member State can now be recognised and implemented in other Member States without the need of holding further lengthy proceedings, as well as the fact that bankruptcy proceedings overreaching into several Member States are subject to identical rules, not only significantly facilitates creditors‘ orientation in the otherwise often dense jungle of legal regulations, but in practice also enables legal specialists to exercise their profession regardless of State borders.
Last but not least, the aforementioned harmonisation helps to encourage cross-border business activities and thus eventually to create a single European area. The Czech Republic, as a Member of the European Union, is actively involved in this process, is part of it, and continues to be one of its creators.
PP Agency, s.r.o.
Investment in the Czech Republic is a booklet published by KPMG in the Czech Republic to provide information to those interested in investing or doing business there. Its purpose is to provide some general guidelines to those considering investment or starting business in the Czech Republic.