Czechia Frequently Asked Questions

1. What are the key benefits of investing in Czechia?

The Czech Republic stands out as a top-tier destination for foreign direct investment (FDI) due to its strategic location, robust economy, and exceptional workforce. Despite challenges such as the ongoing war in Ukraine, which has tempered the prospects of post-pandemic recovery, the country retains its appeal for investors with a stable and transparent business environment, advanced infrastructure, and high quality of life.

Strategic location: the Czech Republic’s central position in Europe provides unparalleled access to European capitals and the broader single market of over 500 million consumers. Its membership in the European Union ensures seamless trade and regulatory alignment. The country boasts a highly developed transport infrastructure, recognised as one of the most advanced globally, and is continually modernising its network to maintain its strategic advantage.
Stable and transparent business environment: political stability, a well-functioning legal framework, and an open investment climate underscore the Czech Republic’s suitability for business. Its legal framework treats foreign and domestic entities equally, offering robust protections for property rights and investment. The country’s low and stable tax rates are among the most competitive in Europe, complemented by a strong banking system and a convertible, stable currency (Czech crown). The country’s membership in the OECD and favourable investment ratings reinforce its credibility and appeal.
Investment protection: the Czech Republic is committed to safeguarding foreign investments, demonstrated by its participation in the Multilateral Investment Guarantee Agency (MIGA) and numerous bilateral treaties with countries such as the U.S., Germany, and Japan. These agreements, coupled with measures to avoid double taxation, provide investors with security and confidence.
Skilled workforce: the Czech Republic offers a unique combination of an educated workforce and competitive labour costs. It is particularly attractive to industries focused on advanced manufacturing, R&D, and technical innovation, with nearly half of university students pursuing STEM fields. The country’s strong linguistic capabilities, with over 70% of the population fluent in at least one foreign language, further enhance its global business compatibility. Its talent pool, ranked 23rd globally in the 2023 Global Talent Competitiveness Index, continues to drive growth in sectors such as biotechnology and software development.
Infrastructure development: in addition to transport, the Czech Republic’s energy and telecommunications infrastructure are highly developed. The country’s telecommunications sector is among the most liberalised in Central and Eastern Europe, with robust competition and advanced fibre-optic networks. Despite challenges from the energy market due to geopolitical tensions, the Czech Republic is prioritising energy security and diversifying its energy sources to ensure long-term sustainability.

To find out more: Czech Business Guide.com, Czech Invest “Investment Climate in the Czech Republic”.

2. What are the most attractive industries for foreign investors in Czechia?

Czechia’s economy is diverse, with strong industries in automotive, IT and software development, manufacturing, logistics, renewable energy, and life sciences. The country is also a growing hub for startups, especially in deeptech, fintech, and AI, driven by strong innovation ecosystems and venture capital support. The most attractive sectors for investors in the Czech Republic include:

Motor-vehicle manufacturing

The largest sector for foreign direct investment, with €14.6 billion across 522 projects since 1993.
Includes automobiles, buses, and trailers, supported by an established supplier base and strategic global partnerships.

Electronics and electrical engineering

A high-growth sector with €4.9 billion in investments and 235 projects.
Includes advanced manufacturing of semiconductors and electrical components.

Biotech and Healthtech

Emerging as a key focus area, with investments in medical devices and R&D projects.
Supported by government incentives and skilled talent pools.

Advanced industrial sectors

Includes metalworking, mechanical engineering, and plastics, collectively receiving over €8 billion in FDI.

Artificial Intelligence (AI) and digital technologies

Focused on high-value-added R&D, including software development and data centres.
Critical to the Czech Republic’s innovation ecosystem.

Ecotech

Investments in green technologies and renewable energy, aligned with sustainability goals.

Space, Aviation, and Defense

A niche sector with growing strategic importance, attracting investments in technical innovations.

Creative Industries

Supported by startup accelerators and incubators, particularly in software development and high-tech services.

To find out more: Czech Business Guide.com

3. How does the investment climate in Czechia compare to other EU countries?

Czechia offers a highly competitive investment climate within the EU, characterized by its strategic location, skilled workforce, and strong industrial tradition. Key aspects include:

Strategic Location and EU Market Access
Czechia’s central position in Europe provides excellent access to major EU markets, making it a logistical hub for trade and investment. This advantage is comparable to other Central European countries like Poland and Hungary.
Favorable business environment
According to the World Bank’s Ease of Doing Business Index, Czechia scores highly in areas like trading across borders and protecting minority investors. While it trails slightly behind Western European countries like Germany in some indicators, Czechia outperforms many other EU nations in manufacturing competitiveness.
Investment incentives
Czechia offers robust investment incentives, particularly for high-value-added sectors such as biotech, electronics, and AI. Incentive structures have shifted in recent years to prioritise innovation-driven investments, aligning with global trends.
Skilled workforce
With a strong tradition in engineering and technology, Czechia’s workforce is known for its expertise in automotive manufacturing, electronics, and R&D. This positions it as a leader in attracting investments compared to other EU countries with less technical specialisation.
Proven track record in FDI
Between 1993 and 2023, Czechia attracted over €35 billion in foreign investments, particularly in motor-vehicle manufacturing and advanced industrial sectors, as reported by CzechInvest (2024). Countries like Germany, Japan, and South Korea have consistently ranked among the top investors.
Shift toward innovation
Recent policy shifts emphassze higher-value-added investments in fields like AI, healthtech, and ecotech. This aligns Czechia with innovation-driven economies like the Netherlands and Finland, though it remains competitive on cost compared to Western Europe.4. What are the procedures for setting up a business in Czechia?

Setting up a business in Czechia is a straightforward process, with well-defined steps and a supportive regulatory framework designed to attract foreign investors. Below is a detailed overview of the main procedures:

1. Choose a Business Structure

Select the appropriate legal form for your business. Common options include:

Limited Liability Company (SRO): the most popular choice for SMEs due to its simplicity and limited liability.
Joint-Stock Company (AS): suitable for larger businesses requiring substantial capital.
Branch Office: ideal for foreign companies expanding into Czechia without establishing a separate legal entity.
Sole Proprietorship: best for individual entrepreneurs.

Note: The choice of structure affects tax obligations, liability, and registration requirements.

2. Reserve a business name

Ensure the proposed business name is unique and complies with Czech naming regulations.
Check the availability of the name through the Commercial Register.

3. Prepare founding documents

Draft and notarise the Memorandum of Association or Articles of Incorporation based on the chosen structure.
These documents should outline the company’s name, address, activities, and share capital.

4. Obtain a trade license

Most businesses require a trade license, which can be obtained from the Trade Licensing Office.
Specific industries, such as financial services or healthcare, may require additional permits.

Documents required:

Identification documents of founders.
Proof of address for the business premises.
Articles of Incorporation.

Register with the Commercial Register

Submit the founding documents to the Commercial Register, managed by the relevant Regional Court.
The process typically takes 5–10 business days.
After registration, the company is assigned an Identification Number (IČO).

6. Open a Bank Account and Deposit Share Capital

Open a business bank account in Czechia.
Deposit the required minimum share capital:
- CZK 1 (nominal) for SRO.
- CZK 2,000,000 (approx. €83,000) for AS.

7. Register for taxes

8. Register employees for social security and health insurance

If the business plans to hire employees, it must register with the Social Security Administration and Health Insurance Companies.

9. Compliance with local regulations

Ensure compliance with zoning laws, building codes (for premises), and environmental regulations if applicable to your business activities.

10. Start operations

Once all registrations are complete, the business is legally operational and can commence activities.

For more information: CzechInvest “Setting up a Business in Czechia”.

Are there government incentives or support programmes for foreign investors?

Yes, the Czech Republic offers a range of government incentives to support foreign and domestic investors who contribute to the development of specific regions and industries. These incentives aim to attract high-value investments that enhance the local environment, drive innovation, and stimulate economic growth.

Investment incentives in Czechia are financial and non-financial support measures designed to encourage businesses to establish or expand operations in the country. These incentives are administered by the state, approved by the government in collaboration with relevant ministries, and facilitated by CzechInvest—the country’s national investment promotion agency.

Types of investment incentives:

Corporate tax relief
- Tax holidays or reduced corporate income tax rates for a specified period.
Cash grants (subsidies)
- For projects involving strategic manufacturing, research and development (R&D), or the creation of business and technology support centres.
Job creation support
- Financial contributions to help offset costs associated with hiring and training employees in specific regions.
Property-related incentives
- Reduced prices for land or infrastructure development support in certain areas.
R&D support
- Funding for companies engaging in innovation and collaboration with research institutions.

By leveraging these incentives, businesses can significantly reduce setup and operational costs while fostering innovation and competitiveness.

For more information: CzechInvest “ Investment Incentives for investors”.

6. What is the tax environment for businesses in Czechia?

Czechia offers a transparent and competitive tax system with several opportunities for businesses and investors.

For individuals:

15% tax rate applies to income up to EUR 65,200 (~CZK 1.7 million) annually.
23% tax rate applies to income above this threshold.
Participation in social security and health insurance is mandatory, providing access to benefits like public healthcare, pensions, and unemployment support.

For businesses:

Corporate income tax is set at 21%, with a 5% rate for basic investment funds.
R&D deductions allow eligible costs to be deducted twice (as operating costs and as an additional 110% deduction).
Investment incentives and grants are available for job creation, strategic investments, and corporate tax relief.

Indirect taxes:

VAT is 21%, with a reduced rate of 12% for certain goods and services.
Imports from outside the EU are subject to customs duties, VAT, and excise duties.

The Czech Republic is aligned with EU tax standards and provides a range of benefits to support domestic and foreign businesses.

Find out more: Czech Business Guide.com

7. What are the legal protections for foreign investors in Czechia?

Czechia offers a stable and transparent legal framework that ensures the protection of foreign investors’ rights and interests. The country is committed to providing a safe and predictable environment for foreign businesses through a range of legal protections:

Property rights and ownership: foreign investors are allowed to own property and real estate in Czechia under the same conditions as domestic entities. The right to own land, intellectual property, and other assets is guaranteed by law, providing investors with legal security.
Non-discrimination: foreign investors are treated equally to Czech nationals in terms of investment opportunities. The Constitution and various laws, including the Foreign Investment Act, ensure that investors face no discrimination based on nationality. They have the same rights to operate businesses, access markets, and participate in public procurement.
Legal framework for investments: the Act on Investment Incentives provides clear guidelines and incentives for foreign investments in sectors like manufacturing, technology, and strategic industries. This law aims to attract foreign capital, create jobs, and boost economic development.
Bilateral Investment Treaties (BITs): Czechia has signed numerous BITs with countries around the world, offering protection against expropriation, unfair treatment, and providing mechanisms for resolving investment disputes, such as international arbitration. These treaties safeguard investors from arbitrary actions and ensure fair compensation if their investments are affected by government actions.

Transparency and Fairness: Czechia maintains a commitment to transparency in its business practices. The legal system is based on EU standards and adheres to rules on competition, antitrust, and anti-corruption. Foreign investors can rely on fair treatment from courts, regulatory bodies, and enforcement agencies.
Free transfer of funds: Czech law guarantees the free transfer of profits, dividends, and other returns on investments to foreign investors without any restrictions, provided that all applicable taxes and duties are duly paid.

These protections, combined with Czechia’s membership in the European Union, enhance investor confidence, making it a reliable and attractive destination for foreign investment.

8. How can I find local partners or network with other investors in Czechia?

Czechia offers several avenues for foreign investors to find local partners and network with other investors, making it an attractive location for business collaboration and growth. Here are some key resources and strategies to help you connect with local partners and the investment community:

CzechInvest: as the national investment and business development agency, CzechInvest offers a range of services to foreign investors, including identifying potential local partners and providing networking opportunities. They can connect you with businesses in your sector, assist in partnership development, and provide information on market conditions and investment incentives. CzechInvest also organises events and networking sessions tailored for investors.
Industry events and conferences: participating in industry-specific events, conferences, and trade fairs is an excellent way to meet potential partners, suppliers, and other investors. Events such as the Czech Business Forum, Prague Investment Summit, and other sector-focused conferences offer opportunities to engage with the Czech investment community and forge meaningful connections.
Chambers of Commerce and Business Associations: Czechia has a number of business associations and Chambers of Commerce, such as the Czech Chamber of Commerce and the International Chamber of Commerce, which are valuable resources for foreign investors. These organisations can help you find local partners, access market insights, and participate in networking events.
Venture Capital and private equity networks: If you’re looking to network with other investors, particularly in the startup and innovation sectors, consider joining local VCs. Organisations like the Czech Venture Capital Association offer a platform for connecting with other investors, sharing opportunities, and gaining insights into the local investment landscape.
Startups and Innovation Hubs: for businesses focused on innovation and technology, startup incubators, accelerators, and innovation hubs provide excellent opportunities for networking. Impact Hub Prague and Czech Startup Association are just a few examples where you can meet local entrepreneurs, investors, and partners who share a similar business focus.
Local business consultancies: many consultancies in Czechia specialise in connecting foreign investors with local businesses. These firms can help you identify strategic local partners, navigate the Czech business environment, and make informed decisions about investment opportunities.
Online platforms and social media: Online platforms such as LinkedIn, Meetup, and other professional networks offer virtual and in-person events where you can connect with investors and potential partners. Many local business groups also organise events and discussions through these platforms, providing an accessible way to start networking before arriving in Czechia.

Government: the Czech government and business organisations regularly organise trade missions, business delegations, and investment promotion activities. These missions often include meetings with local business leaders and networking events, offering a structured way to explore partnership opportunities.