Doing business

Czech Republic

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Setting up a company | FDI in figures | Why you should choose to invest | Procedures relative to foreign investment | Finding assistance for further information

Setting up a company

Types of companies and capital (max/min)	Number of partners/shareholders and liability
Private Limited Company Minimum CZK 200,000	No minimum. Maximum: 50. Partners' liability is limited to the amount contributed.
Public Limited Company Minimum CZK 2 million, at least 30% must be released before the constituting general meeting.	No minimum; can be a sole proprietorship. Liability is limited to the amount contributed.
The general partnership No minimum capital.	At least 2 Liability is unlimited.
The limited partnership No minimum capital but the input of the partner with limited liability must be at least CZK 5,000.	At least 2: 1 active partner and 1 sleeping partner. Liability of active partners is unlimited. Liability of sleeping partners is limited to the amount contributed.

Business setup procedures

Setting up a company	Czech Republic	Eastern Europe & Central Asia
Procedures (number)	9.0	6.3
Time (days)	20.0	16.3

Source: Doing Business.

For further information: Consult Doing Business Website, to know about procedures to start a Business in Czech Republic.
Trade Register, in Czech.
The competent organization: Ministry of Industry and Trade (in Czech and English)

Database of the Commercial Register (in Czech)

Forms of offices, e.g. the Financial Authorities and Trade Licence Offices Trade License Offices – on the web sites of municipal authorities

FDI in figures

Foreign Direct Investment	2008	2009	2010
FDI inward flow (millions USD)	6,451	2,927	6,781
FDI stock (millions USD)	113,173.5	125,827.4	129,892.7
Performance Index*, ranking on 141 economies	86	98	-
Potential Index**, ranking on 141 economies	33	-	-
Number of Greenfield investments***	142	99	-
FDI inwards (in % of GFCF****)	12.5	1.3	-
FDI stock (in % of GDP)	52.4	60.9	-

Source:

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 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