In this page:
FDI in Figures |
Why You Should Choose to Invest in the Czech Republic |
Procedures Relative to Foreign Investment |
FDI in Figures
According to CzechInvest, Investment and Business Development Center, the Czech Republic ranks first among the Central and Eastern European countries in terms of not only FDI stock but also FDI inflow per capita. This situation can be explained by the creation of investment incentives, by the presence of a skilled and inexpensive manpower and also by the natural advantages of the Czech Republic, such as its location in the heart of Central Europe. A change in FDI direction can be observed in the Czech Republic, from the manufacturing industry to the "strategic services centers".
After reaching a record level in 2012 (highest since 2005), FDI dried up in 2013 and should again resume an upward trend.
The European Union and the United States are the two main foreign investors in the Czech Republic.
Country Comparison For the Protection of Investors
||Eastern Europe & Central Asia
|Index of Transaction Transparency*
|Index of Manager’s Responsibility**
|Index of Shareholders’ Power***
|Index of Investor Protection****
Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Performance Index*, Ranking on 181 Economies
|Potential Index**, Ranking on 177 Economies
|Number of Greenfield Investments***
|FDI Inwards (in % of GFCF****)
|FDI Stock (in % of GDP)
- Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
Why You Should Choose to Invest in the Czech Republic
- Strong Points
Good access to the European market, a long history of industrial production and the quality of the labor force are part of the positive factors of the Czech Republic. We can also name the following factors, which represent non-negligible advantages for the country:
- A strong and independent central bank and an extremely stable currency;
- Rapid economic growth;
- A good capacity to withstand the global economic crisis.
- Weak Points
- The Czech Republic is very dependent in terms of export and on the influx of foreign investments, which makes it vulnerable during crises.
- The country's skepticism towards Europe and the lack of interest in the adoption of the Euro could discourage certain European entrepreneurs in the long term and make the country less competitive.
- The country has also experienced political tensions, particularly in 2009, which could undermine its stability in the eyes of potential entrepreneurs.
- The slow pace of legislative and judicial reforms, as well as the judges' lack of familiarity with commercial or intellectual property cases.
- Few reports exist on corruption practices, most commonly connected with public procurement.
- The lack of labor force also slows down the country's development (it is often necessary to hire foreign workers in order to fulfill production demands).
- Government Measures to Motivate or Restrict FDI
From 1998, the government put into place an investment incentive plan and has encouraged massive FDI inflow as well as projects on unused land ("greenfield"), as well as on used land ("brownfield" or development of existing structures). We can name amongst these measures:
- The non-discrimination and equality of treatment between nationals and foreigners;
- The protection of investment and the avoidance of double taxation;
- The protection of property rights and the export of profits.
The Czech Republic Ministry of Industry and Trade and CzechInvest, the investment and business development agency, launched the initiative "Welcome Package for Investors" on 1 July 2013 which aims to make the immigration procedure as expeditious as possible for key foreigners who need residence and work permits for investments in the Czech Republic.
- Bilateral Investment Conventions Signed By the Czech Republic
To date there were signed 77 bilateral conventions
Procedures Relative to Foreign Investment
- Freedom of Establishment
- Acquisition of Holdings
A majority holding interest in the capital of a Czech company is legal.
- Obligation to Declare
- submission of an initial application by the person intending to make the investment
- consideration of the application by the relevant government bodies
- following approval, an offer of incentives
- a formal application for the incentives by the person who will actually claim them – this may be a person other than the investor, e.g. a Czech subsidiary of a foreign investor set up following the offer of incentives
- final consideration and approval
This is valid for all sectors applying for state aid (investment incentives).
- Competent Organization For the Declaration
- Requests For Specific Authorizations
Generally, there is no need to get an authorization before setting up a company, except in some sectors such as national defense, national security, nuclear energy, etc. In particular cases, companies have to contact the respective ministries. Investors shall contact CzechInvest, the agency of the Ministry of Industry and Trade of the Czech Republic, in order to get further information on investment matters.
Learn more about Foreign Investment in the Czech Republic on Globaltrade.net, the Directory for International Trade Service Providers.
Learn more about Investing in the Czech Republic on Globaltrade.net, the Directory for International Trade Service Providers.
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Last Updates: October 2014