DOING BUSINESS IN CZECH REPUBLIC
June 2010

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CZECH REPUBLIC, MARKET PROFILE

Economic outlook
After years of dynamic growth between 2004 and 2008, the Czech economy has experienced an economic downturn and a sharp decline of its GDP in 2009 of 4.2%. The country’s economy is expected to recover and see its GDP increase by 1.5% in 2010.
Thanks to strong FDIs and a low level of external debt, the country’s economy is expected to grow at a dynamic pace from 2011, exceeding 3% growth in 2012.

Labour market
Czech workforce is skilled, with English being widely spoken in Prague by the young generation. Still labour remains cheaper than in Western Europe, at an equivalent level of education.

Real Estate market
The property market in Czech Republic is already well developed, and has benefited from a high level of international investment over the past years. The capital city, Prague, remains the most active market.

Location
Prague is considered as the hub of Central Europe and benefits from an ideal location, being the link between western and Eastern Europe.
At the heart of Central Europe, the Czech capital is very well connected, and offers good transport facilities. Prague airport Ruzyne that provides daily flights to all main cities in Europe, welcomed 11.5m passengers in 2009, and the Czech road network is well developed.

STARTING BUSINESS IN CZECH REPUBLIC

Setting up a legal entity
Foreigners (persons but also legal entities) can set up a business in Czech Republic. The setting up process has recently been improved, and allows you to set up your Czech company in about 4 weeks.
The most common form of legal entity is the “s.r.o.”, the Czech equivalent to an LLC (limited liability company), which requires a minimum capital of 200,000 CZK (approximately 8,000 EUR).
In common practice, the company that helps you setting up your legal entity can lend you the capital, amount that will be withdrawn when the creation process is complete.

Corporate income tax
As at January 2010, the corporate income tax level in Czech Republic is of 19%.

Value added tax (VAT)
The basic Czech VAT rate is of 20%.