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Investment Environment

Investment Environment

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.

 

Investment Climate

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 consequence of several factors – the most notable being the sustained enhancements to the business environment 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.

Moving forward, the record flows of foreign direct investment, the European dominance in computer production, the complete automotive supply chain, the track record in supporting global ICT operations, the burgeoning growth of Czech suppliers and the shift away from labour-cost-sensitive investments to high value added activities and extensive R&D as integral parts of global networks, are all pillars sustaining the Czech Republic’s growth and underpinning international competitiveness.

The Czech Republic is one of the most successful CEE countries in terms of attracting foreign direct investment. Over 173,000 Czech firms across all sectors are now supported by foreign capital. According to the Czech National Bank, a total amount of EUR 77.8 billion worth of FDI has been recorded since 1993.

Investment Climate Brochure (PDF, 868 KB)

 

Main Reasons to Invest in the Czech Republic

  • Safe investment environment
  • Skilled and well-educated workforce
  • Favourable labour costs and price stability
  • Central location in Europe
  • Dense and high-quality infrastructure
  • Transparent system of investment incentives
  • Strong focus on R&D
  • Stable social and political system
  • EU membership
  • Mentality, culture and attitudes similar to those of western countries
  • High quality of life

 

Protection of Foreign Investment

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.

The Czech Republic is a member of the Multilateral Investment Guarantee Agency (MIGA), an international organization for protection of investments, which is part of the World Bank-IMF group. The country has signed a number of bilateral treaties which support and protect foreign investments, for example with the United States, Germany, the UK, France, Austria, Switzerland, Italy, Belgium, Luxembourg, the Netherlands, Finland, Norway, Denmark and China.

The treaties provide that each party shall permit and treat investments and associated activities of the other party’s residents on a non-discriminatory basis, and guarantee full protection and security by law. The Czech Republic has also concluded agreements for the avoidance of double taxation

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.

 

Selected Investors

The change in the structure of foreign direct investment indicates a new trend in the Czech Republic. The number of demanding projects in the fields of research, development and business support services is rapidly increasing. New investors as well as those companies that formerly only came to the country with a production programme are now transferring their higher-value-added development activities (technology centres and business support services centres) to the Czech Republic.

Sector

Investor

Country of origin

AEROSPACE

GE Aviation

Honeywell Aerospace

Latecoere

Textron

UGMK

USA

USA

France

USA

Russia

AUTOMOTIVE

Hyundai

Johnson Controls

Robert Bosch

Toyota/PCA

Volkswagen

South Korea

USA

Germany

Japan/France

Germany

BUSINESS SUPPORT SERVICES

Accenture

DHL

SAP

IBM

Infosys

USA

Germany

Germany

USA

India

ELECTRONICS

ABB

Bang & Olufsen

Foxconn

On Semiconductor

Panasonic

Switzerland

Denmark

Taiwan

USA

Japan

ENERGY & ENVIRONMENT

Bilfinger

Doosan

Mavel

Solar Turbines

Vyncke

Germany

South Korea

USA

USA

Belgium

ADVANCED ENGINEERING

Bombardier

Daikin

Edwards

Ingersol Rand

Siemens

Canada

Japan

United Kingdom

USA

Germany

ICT

Microsoft

NetSuite

RedHat

SolarWinds

Tieto

USA

USA

USA

USA

Finland

LIFE SCIENCES

Lonza

Nanotherapeutics

Otsuka Pharmaceutical

Sanofi

Teva Pharmaceutical Industries

Switzerland

USA

Japan

France

Israel

NANOTECHNOLOGIES & ADVANCED MATERIALS

AGC

FEI Company

Fibertex Nonwovens A/S

Saint-Gobain

Toray Industries

Japan

USA

Denmark

France

Japan

 

Testimonials

“Edwards Company is very pleased with the continuous investment we have made in the Czech Republic. The available infrastructure, quality of education, and the strategic location in the centre of Europe have all positively contributed to the growth of Edwards as a global market leader in its sector.”

EDWARDS, UK

“Why the Czech Republic?

Recognised as an information technology hot spot for more than a decade, with a focus on investment and innovation. CzechInvest, the government’s investment and business development agency, is very supportive of global businesses locating to Czech Republic.”

FNZ, UK

“Our investments in Czech Republic over the past 10 years have proven successful, not least because of the skilled and highly educated workforce, and we are looking to further extend and develop our presence in the country.”

SENIOR PLC, UK

 

 

Investment in the Czech Republic

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. 

 

Sources: CzechInvest and KPMG