FDI in figures

According to the state Investment and Business Development Agency, CzechInvest, foreign investments in the Czech Republic (including profit re-investments) totaled 49% of the GDP at the end of 2005. Thus the Czech Republic ranked first in Central and Eastern Europe both in FDI stock and inflow per capita. This situation can be explained by the establishment of investment incentives and also by the Czech Republic's natural advantages such as its location in the heart of Central Europe. During the deterioration of the international situation, the FDI flow dropped slightly in 2008 and 2009. However, the Czech Republic still belongs to a group of 20 most appealing countries in world to invest in.

Since 2007, a change in FDI direction can be observed in the Czech Republic, which is going from the manufacturing industry to "strategic services centers". The crisis has also reduced the size of foreign investments in the automobile and electro-technical sectors.

The European Union and the United States are two of the biggest foreign investors in the Czech Republic.

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 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.

Bilateral investment conventions signed by the Czech Republic

To date there were signed 77 bilateral conventions

Procedures relative to foreign investment

Freedom of establishment

Guaranteed

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

CzechInvest

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.

Finding assistance for further information

Investment aid agency

CzechInvest
Czech Invest representation abroad in Brussels (Belgium), London (UK), Paris (France), Hong Kong (China), Yokohama (Japan), Munich and Koeln (Germany), Chicago (USA).

Other useful resources