Czech Republic

Ease of Doing Business Rank: 41

Overview

 

Geographic location

The Czech Republic is a landlocked Central European country. Germany lies to the west and northwest, Austria to the south, Slovakia to the east and Poland to the northeast.

Spoken language

The official language of the Czech Republic is Czech, spoken by 96% of inhabitants. Minority languages include Slovak, Russian, Polish, Ukrainian and Vietnamese.

About one-fifth of all Czechs speak a foreign language at an advanced level; however, this usually occurs in urban centers. English is the most widely spoken foreign language, followed by German and Russian.

Population

The 2019 population estimate is 10.69 million.

Prague is the capital city and one of the largest cities (2.3 million). Kladno is Central Bohemia rivals it in size.

Ostrava is the next largest city (1.16 million), followed by Brno (729,510). All other cities have populations of less than 500,000.

Popular industries

The top industries in the Czech Republic are automotive, machinery, iron and steel production, metallurgy, chemical production, electronics, transport equipment, textiles, glass, ceramics, defense and pharmaceuticals.

Education

The Times Higher Education World Rankings includes 8 Czech universities in the top 1,000 in the world.
The Legatum Prosperity Index ranks the Czech Republic’s education system 14th out of 149.

Popular entity types

The most common type of business entities in the Czech Republic are limited liability company, joint stock company and general commercial partnership.

The overwhelming majority of businesses are in the form of a limited liability company.

Czech incentives for business

The Czech Republic offers investment and tax incentives for foreign business. These include a 10-year income tax holiday for newly established and exiting legal entities.

Investment incentives are available in manufacturing, tech, data, customer support and strategic services. Other incentives include real estate tax relief, cash grants on capital expenditures and land transfers at reduced prices.

The government also provides financial support for new job creation up to CK 200,000 per employee. Additionally, companies may benefit from up to a 35% discount on training and re-training costs.

The Czech Republic offers foreign tax credits if the company falls under a tax treaty. Otherwise, businesses can deduct taxes payable as an expense against Czech taxable income.

Companies may also deduct up to 100% for qualifying R&D expenses. This includes normal tax deduction, plus a special tax allowance. If costs exceed the previous year, companies may qualify for an additional 10% on the difference. Credits may be carried forward for the following three years.

The R&D tax allowance applies to direct costs such as hiring professionals and consumed materials as well operational expenses such as utilities. Companies may also qualify for depreciation on fixed assets.

History & Features

 

Main cities for business

Prague is the economic center of the country, ranked 62nd in the world.

Popular historical & tourist attractions

The Czech Republic includes a wide array of historic cities, world-class architecture and charming natural wonders. It boasts an impressive 14 UNESCO World Heritage sites, including the Historic Centre of Prague.

Built between the 11th and 18th centuries this area was the center of architectural and cultural change. Structures of note include Hradcany Castle, St Vitus Cathedral, the Charles Bridge and numerous churches and palaces.

Another UNESCO site is Kutná Hora in Central Bohemia. Its highlight is the Sedlec Ossuary, a Baroque chapel made of between 40,000 and 70,000 human bones.

The city of Kroměříž, located in the east of the Czech Republic is yet another UNESCO site. Its Baroque flower garden includes geometrically sculpted shapes, fountains, statues, and colonnades. The city also boasts an imposing castle once home to wealthy bishops.

The small medieval city of Český Krumlov in South Bohemia is one of the best preserved in Europe, complete with red roofs and views of the castle and river. Just a short distance away, visit České Budějovice, the home of Budweiser beer since the 13th century.

The Czech Republic also includes many outstanding natural areas. Bohemian Switzerland offers panoramic views, forested walks and stunning rock formations. One such formation is the surreal, limestone spires of the Adršpach-Teplice Rocks with pathways winding through tunnels cut into these monoliths.

Brno offers a younger vibe amongst a fascinating mix of gothic, baroque, art nouveau and other styles. The 13th century Špilberk Castle dominates the skyline, but the modernist Villa Tugendhat built by Ludwig Mies van der Rohe merited UNESCO recognition.

If you want to experience the opulence of European aristocracy, visit Karlovy Vary. This spa town features thermal springs, colonnades and the Pramen Vřídlo geyser, which spouts up to 12 meters high.

Plzeň, or Pilsen, is the first city to have produced the famous lager, Pilsner over 175 years ago. Today, the beer is exported around the world. The city also includes St. Bartholomew’s Cathedral with the highest tower in the country and many Renaissance and baroque houses around the main square.

Telč is another UNESCO-protected region due to its location on the crossroads of trade routes, its Gothic castle, and the mysterious passages beneath St. James’s Church that lead under the main square.

In Olomouc you’ll find the 35 meter high Holy Trinity Column, a perfect example of Czech Baroque commissioned to express gratitude by those who survived the plague.

Karlštejn Castle was once a treasury for the crown jewels of the Holy Roman Empire and is one of the most beautiful castles in Europe. It offers grand halls, decadent rooms, and superb views of the area.

The country also sports many contemporary artists and buildings. Perhaps the most famous artist is David Černý. He’s internationally recognized for his controversial sculptures and socio-political commentary.

The Dancing House in Prague designed by Frank Gehry and Vlado Milunić is one of the most iconic buildings in the world and won the Time Award and Design of the Year in 1996. The two towers resemble dancers leaning toward each other as they perform.

History

The present-day Czech Republic was populated by Celts by the 4th century. They were pushed out by German tribes and by the end of the 5th century Slavs arrived in what is now Moravia and Slovakia.

In 863, Byzantine Christian missionaries arrived in Moravia. The Czech state gradually strengthened, however the influence of the Roman Catholic Church expanded. German powers overcame the Czech state in 950 AD and Bohemia became part of the Holy Roman Empire.

The kingdom of Bohemia gained much power and prestige under the rule of Charles IV between 1346 and 1378 AD. He was elected Holy Roman Emperor with leadership over a sovereign state.

The reign of Charles’ successor led to an economic and political crisis, the Hussite reform movement, and decades of turmoil. A temporary agreement between Hussite Bohemia and Catholic Europe was reached in 1436 AD, formally recognizing a second religion.

When the existing ruling line died out, the Habsburg dynasty succeeded to the throne of Bohemia in 1526 AD. They strengthened Catholicism, restricted other religions and created a multi-national empire.

Prague grew into an important center of European culture and the ruler declared religious freedom. However, this led to a civil war between the Czech Estates and the Catholic Emperor. The Estates were defeated in 1620 at the Battle of the White Mountain and the Kingdom of Bohemia lost its independence.

During the 18th century, the empress of Austro-Hungary ruled and she was more sympathetic to the Czechs. Her successor introduced religious toleration in 1781 AD.

In the early 19th century, Czech industry and an interest in Czech culture and history grew. Eventually, the Czech national revival movement strove for political emancipation too which led to revolution in 1848.

After the defeat of Austria-Hungary in World War I, Czechs and Slovaks began to lay the foundation for an independent state.

During World War II, Great Britain, France and Italy agreed to cede Czechoslovakia to the Germans hoping it would stop their advance. When the war ended, the Soviets took over the republic, imposed communism and suppressed political and human rights.

After World War II, the country underwent a period of political liberalization and mass protest which led to looser restrictions. However, in 1968 the Soviets sent half a million Warsaw Pact troops and tanks and occupied the country. Subsequent leaders attempted to restore the Communist political and economic values.

In 1989, the Communist regime fell and by 1993 the Czechoslovak state was peacefully divided into the Czech and Slovak Republics.

Today, the Czech Republic has a parliamentary democracy and a market economy.

Other relevant facts

According to the 2011 census, most inhabitants identify as Czech (63.7%). The remaining populations claim Moravian (4.9%), Slovakian (1.4%) or other ancestries.

According to the 2011 census, many Czechs claim they don’t practice a religion (34.5%). The Catholic Church (10.5%), Protestantism (1%) and other Christian churches are the most significant formal religious influences.

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, the Czech Republic is the 29th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates the Czech Republic 23rd globally and states, “Implementation of critical reforms by previous administrations streamlined business start-up procedures, embedded a relatively efficient tax regime to facilitate entrepreneurial growth, and institutionalized openness to global trade and investment.”

World Bank’s “Doing Business” rankings rate the Czech Republic 35th for ease of doing business in the world.

Czech Republic Entity Support Services by Blueback Global

Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.

The common scenarios that may give rise to the need for Blueback Global’s services include the following:

With our integrated approach, you can expect the following experience:

We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Czech Republic. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.

Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.

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