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In this page: FDI in Figures | What to consider if you invest in the Czech Republic | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information

 

FDI in Figures

According to UNCTAD's World Investment Report 2021, FDI inflows to the Czech Republic fell to USD 6.3 billion in 2020 from USD 10 billion the year before. In the same period, the total stock of FDI stood at USD 189 billion. The country continues to rank among the largest recipients of FDI inflows into Central Europe. EU member states are the most important foreign investors in the Czech Republic. In terms of FDI stocks, the Netherlands is the largest investor in the country, followed by Luxembourg, Germany and Austria. Recent FDI data show a high share of Chinese, Korean and United States investors. Financial services and manufacturing receive the majority of FDI (the latter spearheaded by the car industry and metallurgy), followed by the real estate and wholesale and retail trade sectors. According to the latest data from OECD, FDI inflows to the country stood at USD 2.5 billion in the first semester of 2021, marking a 14.8% decrease compared to the same period one year earlier (mostly due to disinvestment in the first quarter of 2021).

According to the Government Agency for Foreign Direct Investment, the Czech Republic ranks first among central and eastern European countries in terms of FDI stock and per capita inflows. This is due to the introduction of investment incentives, the presence of skilled and inexpensive labour, and the geographical advantages of the Czech Republic, such as its location in the heart of Central Europe. Since May 2021, the Czech Republic introduced a new FDI screening mechanism in line with the EU guidelines. Under the new law, any non-EU investor must obtain a permit before acquiring more than 10% of the shares or voting rights of a company operating in a sector that is sensitive for the country’s safety or its internal or public order (e.g. energy, gas, heat and water management, food and agriculture, healthcare, transportation, communication and IT systems, financial markets, emergency services and public administration, military material, etc.). The Czech Republic was ranked 41st out of 190 countries in the World Bank's latest Doing Business report, dropping 6 spots compared to the previous edition. This was mainly due to near-stagnation of the country's progress with regard to the ease of doing business.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 10,1089,4115,806
FDI Stock (million USD) 171,334195,240200,587
Number of Greenfield Investments* 9057109
Value of Greenfield Investments (million USD) 2,3692,5963,094

Source: UNCTAD, Latest available data.

Note: * Greenfield 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.

 

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries 2019, in %
Netherlands 18.2
Luxembourg 17.8
Germany 15.3
Austria 10.2
France 7.0
Switzerland 4.2
Cyprus 3.6
Main Invested Sectors 2019, in %
Financial and insurance services 32.6
Manufacturing 27.5
Wholesale and retail trade 9.1
Real estate 9.1
Professional, scientific and technical activities 5.9
Information and communication 5.0

Source: OECD's Statistics - Latest available data.

 
Form of Company Preferred By Foreign Investors
Limited liability company or joint-stock company
Form of Establishment Preferred By Foreign Investors
Corporation limited (so called s.r.o.)
Main Foreign Companies
Hyundai Motor Company, Sungwoo Hitech, FTE automotive s.r.o., Sun Microsystems Czech, TietoEnator.
You can also consult the "Success Stories" section on CzechInvest website.
Sources of Statistics
Czech National Bank

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What to consider if you invest in the Czech Republic

Strong Points
Advantages for FDI in the Czech Republic:

  • The Czech Republic is a member of the EU but not of the euro zone
  • The country's central bank is strong and independent and regulates a stable currency. This gives the country excellent access to the European market as well as positive and stable international relations
  • A stable banking sector that has shown resilience to recent crises
  • Public spending at a satisfactory and controlled level
  • One of the lowest unemployment rates of Europe creates an optimum and healthy business environment. 
  • The country's long history of industrial production (the sector continues to have great potential)
  • The quality of its labour force (at high intermediate cost)
  • Central geographic location.

See the Doing Business Report 2020 for more information on the business environment in the Czech Republic (which ranks 41st out of 190 economies).

Weak Points

Disadvantages for FDI in the Czech Republic:

  • The economy of the Czech Republic is highly dependent on the level of exports and the inflow of foreign investment, which makes it particularly vulnerable in times of crisis
  • The country's euroscepticism and the lack of interest in adopting the euro can discourage some European entrepreneurs in the long run and make the country less competitive
  • The country has experienced political tensions, which may jeopardise its stability in the eyes of potential entrepreneurs
  • Legislative and judicial reforms are slow to materialise; this can be explained by a political history made of governmental coalitions.
  • The shortage of labour and the ageing of the population also constitute a significant obstacle to the country's development and limit the country's ability to meet production requirements
  • The automotive sector occupies a large share of the economy.
Government Measures to Motivate or Restrict FDI
In order to reduce the dependence of the Czech market on its European trading partners (mainly Germany), the government has undertaken reforms since 2011-2012 to diversify the country's export opportunities and the structure of its export market as well as of its economic fabric. To support these changes an export strategy (2012-2020) targeting fast-growing emerging markets and a strategy to improve competitiveness (launched in 2011) have been implemented. The Czech Ministry of Industry and Trade and CzechInvest, the investment development agency, have launched the "Welcome Package" initiative for investors, on 1 July 2013, which aims to make immigration procedures as easy as possible for foreign investors who require residence and work permits in the Czech Republic.

Moreover, the Czech government has put in place an economic program based on the promotion of entrepreneurship and the modernisation of public administration (so that it is more functional and transparent). As concrete consequences, this has for example made it easier to obtain public funding in the fields of science, research and innovation.

In 2019, the government made significant changes to the Act on investment incentives, eliminating incentives for investments targeting low-skilled labor growth, restricting incentive payments to primarily high value-added investments that focus on R&D and create jobs for university graduates.

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Protection of Foreign Investment

Bilateral Investment Conventions Signed By the Czech Republic
To see the list of investment treaties signed by the Czech Republic, consult UNCTAD's International Investment Agreements Navigator.
International Controversies Registered By UNCTAD
Refer to UNCTAD's Investment Dispute Settlement Navigator.
Organizations Offering Their Assistance in Case of Disagreement
ICCWBO , International Court of Arbitration, International Chamber of Commerce
ICSID , International Center for Settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency
The Czech Republic is a signatory of the MIGA convention.
 
Country Comparison For the Protection of Investors Czech Republic Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 2.0 7.5 7.0 5.0
Index of Manager’s Responsibility** 6.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 9.0 6.8 9.0 5.0

Source: Doing Business - Latest 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.

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Procedures Relative to Foreign Investment

Freedom of Establishment
There are no laws or practices that discriminate against foreign investors in the Czech Republic (except for certain sensitive sectors).
Acquisition of Holdings
A majority holding interest in the capital of a Czech company is legal. However, some sectors such as banking, financial services, insurance, or defense equipment have certain limitations or registration requirements, and foreign entities need to register their permanent branches in the Czech Commercial Register.  Some professionals, such as architects, physicians, lawyers, auditors, and tax advisors, must register for membership in the appropriate professional chamber.
Obligation to Declare
New legislation concerning FDI screening has been approved by the Czech parliament in 2020 (see below). In any case, foreign entities need to register their permanent branches in the Czech Commercial Register.
Competent Organisation For the Declaration
Czech Invest
Czech Commercial Register
Requests For Specific Authorisations

Generally, there is no need to get an authorisation before setting up a company, except in some sectors such as national defence, national security, nuclear energy, etc. In particular cases, companies have to contact the respective ministries.
Following the European Commission’s investment screening directive, the Czech parliament approved a bill according to which all investments made by entities outside of the EU or entities directly or indirectly controlled by entities outside of the EU will be subject to screening in case the foreign investor:

  • acquires at least 10% voting rights;
  • is a member of corporate bodies or boards;
  • exercises ownership rights (including over assets and not only shares); or
  • has access to sensitive information or technology.

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Office Real Estate and Land Ownership

Possible Temporary Solutions
There are many business centres in the biggest cities (Prague, Brno, Ostrava). Most of them are owned and operated by commercial companies.
Consult the websites Instant Offices, CoWorker, OfficeRentInfo.
The Possibility of Buying Land and Industrial and Commercial Buildings
Czech legal entities, including 100% foreign-owned subsidiaries, may own real estate without any limitations (including agricultural land); same as for foreign individuals.
Risk of Expropriation
Government expropriation of property can only be done in case of public interest, in a non-discriminatory manner and in full compliance with international law.

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Investment Aid

Forms of Aid
The government provides investment incentives in the form of corporate income tax relief for 10 years, cash grants for job creation up to USD 8,000 per job, cash grants for training up to 50% of training costs, and cash grants for the purchase of fixed assets up to 20% of eligible costs.
All investment-incentive applications are newly assessed and approved by the government, which particularly take into consideration the given project’s benefits for the region and the country.
Privileged Domains
The Czech Republic offers incentives to foreign and domestic firms alike that invest in the manufacturing sector, technology and R&D centers, and business support centers. Incentive programs are available for projects involving R&D activities and for those creating jobs for university graduates, as well as for those in specialized sectors (including aerospace, information and communication technology, life sciences, nanotechnology and advanced segments of the automotive industry).
Privileged Geographical Zones
The 2019 amended Act on investment incentives established more favourable rules for technological investments in sectors such as aerospace, information and communication technology, life sciences, nanotechnology, and advanced segments of the automotive industry.
Free-trade zones
Free zones with control type I are operational in the following cities: Ostrava, Pardubice, Hradec Kralove, Tiskařská, Zlín.
For a list of the points of single contact in Czech Republic, consult the dedicated page on the portal Businessinfo.cz.
Public aid and funding organisations
CzechInvest
It is the agency of Ministry of industry and trade. Czechinvest is also intermediate body for all structural funds interventions oriented on industry and trade. It provides assistance during implementation of investment projects, consulting services for foreign investors entering the Czech market, support for suppliers, and assistance for the development of innovative start-up firms.
 
 

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Investment Opportunities

The Key Sectors of the National Economy
Automotive, machinery, electronics, life sciences, airplane technique, business services, IT.
For further information, consult the section "Key Sectors" on the CzechInvest website.
High Potential Sectors
Information technologies, Software development, Life sciences; as the Czech government has taken strides in recent years to diversify its traditional investments in engineering into new fields of research and development and innovative technologies.
Privatization Programmes
No privatization program is currently underway, as the vast majority of the Czech economy is now in private hands following the privatization waves that started in the 90s.
Tenders, Projects and Public Procurement
TED - Tenders Electronic Daily, Business opportunities in the EU
DgMarket, Tenders Worldwide
Czech Tenders, Tenders in Czech Republic

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Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors
None.

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Latest Update: June 2022