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Czech Republic – Your Partner Ministry of Industry and Trade www. mpo.cz Basic Information Czech Republic in General Cultural Heritage Czech Spas Czech Republic in General Area 79,000 km 2 Location in the very heart of Europe Population 1 0.2 million (94% Czech)

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czech republic your partner
Basic InformationCzech Republic – Your Partner

Ministry ofIndustryandTradewww.mpo.cz

basic information

Basic Information

Czech Republic in General

Cultural Heritage

Czech Spas

czech republic in general
Basic InformationCzech Republic in General

Area79,000 km2

Locationin the very heart of Europe

Population10.2 million (94% Czech)

Political system parliamentary democracy

Head of state president Václav Klaus

Currency (CZK, koruna)

1 USD = app. 18 CZK;

1 EUR = app. 25.5 CZK

State languageCzech

Time zoneGMT +1

Transport excellent connection,

5 international airports

Membership in

organisations IMF, WB, WTO, OECD…

cultural heritage
Basic InformationCultural Heritage

Cultural Heritage

200 chateaux & castles,

12 UNESCO monuments

historical towns

Telč

Kutná Hora

Holašovice

Lednice

Zelená Hora

czech spas
Basic InformationCzech Spas

Czech spa tradition –

over 36 spas

macroeconomic data

Macroeconomic Data

Overview of the Czech Economy

Gross Domestic Product

Industrial Output

Inflation

Employment

overview of the czech economy
Macroeconomic DataOverview of the Czech Economy…
  • Main characteristics
    • High economic growth in recent years – gradual catch up with the average EU GDP level (77% of EU 27 level in 2008)
    • Big share of manufacturing sector
    • Small, open economy
    • Strong trade and ownership links with EU
overview of the czech economy8
Macroeconomic Data…Overview of the Czech Economy
  • Fast and balanced real convergence
  • Low inflation
  • External balance – trade surplus and modest current account deficit
  • Fiscal prudence – reduced public deficit (1,2% GDP in 2008), moderated public debt (29,4% GDP)
gross domestic product
Macroeconmic dataGross Domestic Product..
  • Peak in the half 2006 (6.9% growth)
  • Still good results for 2008 with significant deterioration in 4.Q 2008
  • 2.8% growth in 2008
  • Czech economy in recession – contracting in two consecutive quarters: in the forth quarter 2008 (-0.1% q/q) and in the first quarter 2009 (-3.4% q/q)
gross domestic product10
Signs of recovery: 0.1% growth (q/q) in the second quarter 2009

The outlook for this year is influenced by weak demand in the euro zone with negative impact to the Czech exports

Basic Information

…Gross Domestic Product
gross domestic product11
Gross Domestic Product

Macroeconomic data

Gross Domestic Product

Gross Domestic Product

(constant prices, y/y change, %)

gross domestic product12
Macroeconomic DataGross Domestic Product

Gross Domestic Product in %

(by sectors - 2008)

industrial output
Industrial Output

Flat growth in 2008: 0.4% y/y growth

Important share of automotive industry (23%)

Falling down since October 2008 (in 1st quarter 2009 -19.1% y/y, in 2nd quarter 2009 -18.8% y/y

New orders falling dramatically down

But signs of stabilisation in recent month

Main reasons - poor external demand, decreasing domestic demand, slowdown in private investment

Macroeconomic Data

industrial output14
Industrial Output

Macroeconomic Data

Industrial Production

(y/y changes)

industrial output15
Industrial Output

Macroeconomic Data

New Industrial Orders

(current prices index in %)

inflation
Inflation

Higher inflation in 2008 - due to administrative reasons (hike in regulated prices) and high commodity prices

Decreasing since September 2008

Macroeconomic Data

inflation17
Inflation

Macroeconomic Data

Consumer Price Index

(Change in %)

employment
Employment

Positive trend changed at the end of 2008

Since November raising unemployment due to negative development of the economy

Macroeconomic Data

employment19
Employment

Macroeconomic Data

Unemployment Rate

(in %)

foreign trade

Foreign Trade

Overview

Foreign Trade in Current Prices

Foreign Trade by Regions 2008 - USD

Foreign Trade by Regions 2008 - EUR

Foreign Trade by Regions 2009 - USD

Foreign Trade by Regions 2009 - EUR

Exports in 2008 - 2009

Imports in 2008 - 2009

overview
Foreign TradeOverview
  • Still good results for 2008 - 69.4 bill. CZK (2.7 bill. EUR) trade surplus
  • Export and import falling down since October 2008
  • New foreign orders falling dramatically down - mainly in the car industry
  • Main reasons - in the first half of 2008 - extremely strong CZK, since the second half - decreasing external demand
  • Signs of stabilisation and improving external demand in recent months
foreign trade in current prices
Foreign TradeForeign Trade in Current Prices

Foreign Trade

(current prices, y/y change in %, balance in bill. CZK)

foreign trade by regions 2008 usd
Foreign TradeForeign Trade by Regions 2008 - USD

Foreign Trade by Regions

(2008 – final data)

*)China, North Korea, Cuba, Laos, Mongolia, Vietnam

foreign trade by regions 2008 eur
Foreign Trade by Regions 2008 - EUR

Foreign Trade

Foreign Trade by Regions

(2008 – final data)

*)China, North Korea, Cuba, Laos, Mongolia, Vietnam

foreign trade by regions 2009 usd
Foreign Trade by Regions 2009 - USD

Foreign Trade

Foreign Trade by Regions

(2009 - preliminary data)

*)China, North Korea, Cuba, Laos, Mongolia, Vietnam Source: Czech Statistical Office

foreign trade by regions 2009 eur
Foreign Trade by Regions 2009 - EUR

Foreign Trade

Foreign Trade by Regions

(2009 - preliminary data)

*)China, North Korea, Cuba, Laos, Mongolia, Vietnam

exports in 2008 2009
Exports in 2008 – 2009…

Foreign Trade

Main Trade Partners

exports in 2008 200928
…Exports in 2008 - 2009

Foreign Trade

Main Trade Partners

Source: Czech Statistical Office

imports in 2008 2009
Imports in 2008 – 2009…

Foreign Trade

Main Trade Partners

imports in 2008 200930
…Imports in 2008 - 2009

Foreign Trade

Main Trade Partners

Source: Czech Statistical Office

foreign direct investment

Foreign Direct Investment

Inward Foreign Direct Investment

Investment Opportunities - Year 2009

Investment Incentives Scheme

inward foreign direct investment
Foreign Direct InvestmentInward Foreign Direct Investment

Inflows of FDI (mill. EUR, mill. USD)

Source: Czech National Bank

investment opportunities year 2009
Foreign Direct InvestmentInvestment Opportunities - Year 2009…
  • Traditional Sectors of Czech Industry
    • Automotive and Aerospace Industry
    • Electronics
    • Precision Engineering
    • Chemicals and Plastics
  • Sectors with High Potential for the Future
    • Nanotechnology
    • Biotechnology, Life Sciences and Medical Devices
    • Renewable and Alternative Energy
investment opportunities year 200934
Foreign Direct InvestmentInvestment Opportunities - Year 2009…
  • High-tech services
    • Information and Communication Technologies, Software Development
    • Strategic Services – Shared Service Centres, Expert and Solution Provider Centres, High-tech Repair Centres
  • Research and Development
    • Innovation Activities and Applied R&D
investment incentives scheme
Foreign Direct InvestmentInvestment Incentives Scheme
  • Manufacturing investors meeting the criteria may currently apply for all or any of the following incentives:
    • The corporate income tax relief (full or partial) for a period of up to five years
    • Training and retraining subsidies
    • Job creation grants
    • Transfer of state-owned land at a discount
legislation

Legislation

Tax System of the Czech Republic

Tax Rates in the Czech Republic

The Main Indirect Taxes

Legal Requirements

Social Security and Health Insurance

Property Market

tax system of the czech republic
The tax system of the Czech Republic is similar to other European countries

The corporate income tax has a rate of 20 per cent (2009)

Each taxpayer may choose linear or accelerated depreciation

The terms of depreciation range from 3 to 50 years

The real estate tax is levied on land and building

The taxation period is one calendar year

Legislation

Tax System of the Czech Republic
the main indirect taxes
LegislationThe Main Indirect Taxes…
  • The VAT has a basic rate of 19% and reduced rate of 9%
  • The basic rate is levied on the majority of goods and services
  • Exported goods are exempt from tax with possibility of claiming a VAT refund paid on input
  • The tax is paid monthly or quarterly depending on the turnover of the taxpayer
  • Excise duties are levied on mineral oils, liquors, wine, beer and tobacco products
the main indirect taxes40
Legislation…The Main Indirect Taxes
  • The tax is paid when goods are released for consumption, i. e. when they leave a registered tax warehouse. Excise duty on tobacco product is paid through buying stamps.
legal requirements
Starting up a business

A foreign person‘s authorization to carry on a business activity on the territory of the Czech Republic takes effect on the day as of which that person, or that person‘s organizational component, is recorded in the (Czech) Commercial Register

Exempt from this are individuals (natural persons) who have a permanent residential address in a member state of the European Union

Incorporation or establishment of a Czech legal entity is another option

Legislation

Legal Requirements
property market
LegislationProperty Market

Office Market

(avg rent EUR/m2/month)

Business and Logistic Parks

(avg rent EUR/m2/month)

anti recession measures

Anti-recession Measures

Part one

Part two

part one
Lower taxes for businesses (corporate tax)

Use of money from reserve funds of ministries

EGAP (Czech ECA) and Czech Export Bank facilities support

Support to businesses in agriculture

Increase of the financing of the infrastructure

Anti-recession Measures

Part one
part two
Reduction of social insurance contributions

Faster write off periods

Remission of advance income tax payments for small businesses

Guarantees for loans from CMZRB bank

Thermal insulation for buildings

Investment into R&D

Reduction of administrative loading of corporate sector

Anti-recession Measures

Part two
sources

Sources

Foreign Offices - Investment Support

Sources of Useful Information

The Most Important Websites